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Photo: BRENDAN MCDERMID/ REUTERS

Poker continues in the U.S. capital, but time is running out. Now there are also clear warnings from outside about the possible consequences of the debt dispute. The rating agency Fitch takes a somewhat more critical view of the creditworthiness of the world's largest economy, the USA, in view of the ongoing dispute and signals a possible downgrade.

The credit watchdogs retained the top rating of "AAA" on Wednesday (local time), but lowered the outlook for creditworthiness to "negative", so that a downgrade could threaten. Fitch justified the decision with the ongoing dispute over raising the debt ceiling and a resulting threat of national bankruptcy. Fitch is one of the three leading rating agencies, along with Moody's and Standard & Poor's.

According to Fitch, a solution to the debt dispute is still expected. However, it is believed that the risk has increased that the debt ceiling will not be raised in time and that the US government will no longer meet its payment obligations.

"The dispute over the debt ceiling and the failure of the U.S. authorities to seriously address the medium-term fiscal challenges that will lead to rising budget deficits and a growing debt burden signal downside risks to U.S. creditworthiness," Fitch said.

In the United States, it is the parliament, not the government, that decides how much money the state can borrow. For weeks, Republicans and Democrats have been arguing in tough rounds of negotiations about raising the debt ceiling.

The limit could be reached as early as June 1

The Republicans want to approve an increase in the debt ceiling only in return for billions of dollars in cuts in government spending. They are calling for less money to be spent in the 2024 financial year than in the current financial year. The White House has proposed to freeze spending levels and raise taxes on rich and large corporations, but this is opposed by Republicans.

According to forecasts by the Treasury Department, there is a threat of default by the US government from the beginning of June. If this were to happen, it could lead to a global financial crisis. Treasury Secretary Janet Yellen has repeatedly warned that June 1 could be that "Day X."

Similar case twelve years ago

In 2011, a Republican majority in the U.S. House of Representatives delayed raising the debt ceiling for so long that the U.S. credit rating was downgraded for the only time in history. At that time, Standard & Poor's revoked the top rating of "AAA" and has since rated the USA "AA+" – i.e. one grade worse.

Biden is even considering circumventing Congress and simply ignoring the debt limit because of the risks. He could invoke the 14th Amendment of the U.S. Constitution, which states that the "legal validity" of the national debt of the United States "shall not be questioned."

However, such an approach would be unprecedented in US history and legally questionable.

jok/dpa