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The U.S.'s perfect credit rating is on notice for the second time in its history


As we've been reporting this morning, President Biden and House Speaker Kevin McCarthy have a deal to raise the nation's borrowing limit, avoiding default. If Congress approves it in time, then all is well. Maybe not. Fitch Ratings, one of the three major ratings agencies, has put the U.S. on notice that it's taking a hard look at America's prized AAA credit rating. And that's giving NPR's David Gura deja vu.

DAVID GURA, BYLINE: Back in 2011, the U.S. was in a very similar position. It was days away from defaulting on its debt for the first time in history. House Speaker John Boehner and President Obama were at loggerheads over raising the debt limit. Negotiations had dragged on and on. And then in early August, there was an agreement.


BARACK OBAMA: Congress has now approved a compromise to reduce the deficit and avert a default that would have devastated our economy.

GURA: There was relief. The U.S. would be able to pay its bills. But that relief didn't last long. A few days later, there was a bombshell announcement on a Friday, hours after the markets closed.


UNIDENTIFIED PERSON #1: When one of the big three credit rating agencies, Standard & Poor's, downgraded the U.S. government's credit rating.

GURA: This was huge news. The U.S. had never lost its top-tier AAA credit rating. And to many people, it was a shock. After all, lawmakers in the White House had clinched a deal. S&P was worried about the debt and the deficit, but the recent political fight raised questions about the country's ability to pay its creditors in the future. The downgrade stunned Washington, and Wall Street panicked.


UNIDENTIFIED PERSON #2: U.S. stocks were tumbling at the opening bell amid a rout in global markets.

GURA: President Obama addressed S&P's decision in a speech to the American people. And his Treasury secretary, Tim Geithner, didn't hold back in an interview with CNBC.


TIMOTHY GEITHNER: I think S&P has shown really terrible judgment. And they've handled so very poorly, and they've shown a stunning lack of knowledge about basic U.S. fiscal budget math.

GURA: S&P had to defend the downgrade to the public, and that's how John Chambers, then the chair of the committee that made the call, found himself in unfamiliar territory as a guest on cable TV in prime time.


JOHN CHAMBERS: The political brinkmanship we saw over raising the debt ceiling was something that was really beyond our expectations.

GURA: S&P had warned the U.S. its AAA rating was in jeopardy months earlier. And 12 years later, Chambers remembers how much work he and his colleagues put in before they voted. They looked at data and projections from the nonpartisan Congressional Budget Office, and Chambers and his boss traveled to Washington to talk with government officials. They feared political divisions had become so deep, policymakers wouldn't be able to make important, consequential decisions. After the downgrade, Chambers was thrust into the spotlight, and he paid a big price personally.

CHAMBERS: Every time I walked my dog in the morning and in the evening, I had a bodyguard with me.

GURA: Chambers spent 24 years at S&P. Ratings agencies are used to pushback from companies and countries, but he was unprepared for this kind of vitriol. Chambers remembers his inbox filling up with hate mail and death threats.

CHAMBERS: I didn't take the subway for six months because people thought I might get pushed in front of an oncoming train.

GURA: Chambers says he understood the significance of that downgrade, even if he couldn't imagine the blowback, the outrage from investors and executives from people around the world, including the president of the U.S.

CHAMBERS: Well, we didn't come to it lightly. It was an important decision. It was probably the most important decision I made in my career.

GURA: And it's one Chambers says he doesn't regret, especially when he looks at what's happened since and what's happening now. The U.S.'s fiscal situation is worse, and so is the political climate. And although Chambers is retired now with no insight into how his former employer and the other two major rating agencies view the U.S., he says these protracted fights that take the U.S. to the brink of default are damaging.

CHAMBERS: Every time we have incidents like this, it's just - even if you get through them without defaulting, it chips away at the confidence that people have in the U.S.

GURA: And, Chambers says, it threatens the United States' leadership position in the global economy. David Gura, NPR News, New York. Transcript provided by NPR, Copyright NPR.

David Gura
Based in New York, David Gura is a correspondent on NPR's business desk. His stories are broadcast on NPR's newsmagazines, All Things Considered, Morning Edition and Weekend Edition, and he regularly guest hosts 1A, a co-production of NPR and WAMU.