Investor Kevin O’Leary said Wednesday that President Joe Biden’s policies helped cause the recent drop in the United States’ credit rating.
Fitch Ratings, one of the “Big Three” credit agencies, announced Tuesday that it was downgrading the country’s long-term credit rating from “AAA” to “AA+,” citing “expected fiscal deterioration over the next three years.” Fitch Ratings expects the federal government’s deficit GDP to rise in 2023 to 6.3 percent, a 3.7 percent rise 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 said the CHIPS Acts and the Inflation Reduction Act, both of which Biden signed into law, are causing an increase in spending and raising the deficit. (RELATED: Karine Jean-Pierre Says US Credit Rating Downgrade ‘Defies Reality’)
“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 “Shark Tank” star also pushed back against the Biden administration’s claim that the Jan. 6 Capitol riot Capitol riot had eroded investors’ trust 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.
White House press secretary Karine Jean-Pierre said in a Tuesday statement that the credit rating downgrade “defies reality,” claiming that Biden has “delivered the strongest recovery of any major economy in the world.”
The president took credit for decreasing the deficit by $1.7 trillion, though the drop mostly resulted from the end of pandemic emergency spending as well as a rise in tax revenue from inflation. In the first year of the Biden administration, the debt rose $1.5 trillion, a 5.6 percent year-over-year increase, according to the Balance Money.