On Wednesday, investor and "Shark Tank" star Kevin O’Leary made a statement attributing the recent slump in the United States' credit rating to President Joe Biden's policies.
Fitch Ratings, a member of the prestigious "Big Three" credit agencies, communicated on Tuesday that it was revising the country's long-term credit rating downwards, from "AAA" to "AA+." The reason for this downgrade was the "anticipated fiscal deterioration over the coming three years." Fitch Ratings foresees an increase in the federal government's deficit GDP to 6.3 percent in 2023, which is a 3.7 percent increase from 2022.
“It’s really about government and policy. There’s no way to sugarcoat this at all. It’s bad,” O’Leary said on Fox News. “And I’ll you how you measure it’s bad. Basically when you downgrade the U.S. economy, which is what this downgrading is, you are losing a little faith in the U.S. dollar and the U.S. Treasury bill because the default currency of the world defined by every commodity priced by U.S. dollars is the good faith of the U.S. government. And the whole world trusts it, most sovereign funds keep the majority of their liquidity in U.S. dollars. That got hurt 24 hours ago.”
O'Leary stated that the CHIPS Acts and the Inflation Reduction Act, both sanctioned by Biden, are resulting in escalated spending and causing a surge in the deficit.
“I wouldn’t say it’s the two bills that caused the camel’s back to be broken, but it was enough for them to say, ‘Ok, I’ve seen enough,'” O’Leary continued. “Now for me and you, or anybody at a kitchen table in America, your car loan just went up from five to somewhere between seven and nine percent. That’s not gonna help. So the cost of your loan and your borrowing and your mortgage? Going up, period.”
The celebrity from "Shark Tank" also countered the Biden administration's assertion that the Jan. 6 Capitol riot had undermined investors' confidence in the United States.
“I think that’s a political statement surely. I mean, really this downgrade is about debt and the ability to pay it back. It looks beyond any one event. It doesn’t matter. The more the government goes into deficit spending, the more rating agencies scrutinize the quality of that debt,” he said.
In a statement on Tuesday, Karine Jean-Pierre, the White House press secretary, disputed the credit rating downgrade as something that "defies reality." She asserted that under Biden's leadership, the United States has "delivered the strongest recovery of any major economy in the world."
The president claimed responsibility for a $1.7 trillion reduction in the deficit. However, this significant decrease primarily originated from the cessation of emergency spending due to the pandemic and an inflation-driven increase in tax revenue. According to the Balance Money, during the first year of the Biden administration, the debt increased by $1.5 trillion, marking a 5.6 percent growth year-over-year.
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