Fitch Cites Unaddressed Fiscal Challenges in U.S. Downgrade — Market Talk

1826 EDT — Fitch Ratings cites a variety medium-term fiscal challenges that have gone unaddressed in its decision to downgrade the U.S.’s long-term rating to “AA+” from “AAA”. High interest rates and rising debt stock will increase the interest service burden, an aging population and rising healthcare costs will raise spending on programs for the elderly absent fiscal policy reforms. The Congressional Budget Office projects that the Social Security fund will be depleted by 2033, and the Hospital Insurance Trust Fund, used to pay for benefits under Medicare Part A, will be depleted by 2035. Fitch also cites the likelihood to make permanent 2017 tax cuts that are set to expire in 2025 given past history, which it says will result in higher deficit projections. (denny.jacob@wsj.com; @pennedbyden)