Beijing-based Dadong Global has cut its sovereign rating of the United States to BBB+ from A-, also placing the country on negative outlook.
A press release on the rating agency’s website pointed to “deficiencies in the current US political ecology,” which have weighed on the administration of the federal government.
“Under the political ecology which is built by the factional rivalries, factional interests are prioritized, and it is hard for the government to focus on the management of the national economy and social development,” the statement said.
“Therefore, the national economy is highly debt-driven,” it went on. “Nevertheless, the government did not discover from the financial crises that it is the debt-driven mode of economic development that has hindered the country from making ends meet. Instead, it continues to seek credit expansion through direct issuance of the US dollars, therefore serves as the ‘track walker’ on the wrong track that departs from logic.”
Dadong also cited the recently passed tax cuts as contributing to the decision.
“Massive tax cuts directly reduce the federal government’s sources of debt repayment, therefore further weakens the base of government’s debt repayment.”
The agency estimates that the US federal government’s fiscal deficit will increase by 3.9% and 4.1% over this year and the next.