Fitch Ratings on Tuesday downgraded America’s long-term foreign-currency-issuer default rating, citing ongoing and projected future fiscal instability, an increasingly long and disruptive governance process, and rising debt and deficits.

The tumultuous negotiations and gridlock between Republicans and Democrats in June over raising the debt ceiling were evidence that “there has been a steady deterioration in standards of governance over the last 20 years,” Fitch, one of the “big three” U.S. credit-ratings agencies alongside S&P and Moody’s, said in a statement. That episode put the U.S. at risk of payment default and threatened to plunge it into a debt crisis. After weeks of back-and-forth, the parties agreed to suspend the debt limit for two years until January 2025, with a number of conditions and concessions made to both sides.

“The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management,” Fitch added. “The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management. In addition, the government lacks a medium-term fiscal framework, unlike most peers, and has a complex budgeting process. These factors, along with several economic shocks as well as tax cuts and new spending initiatives, have contributed to successive debt increases over the last decade.”

Among the others factors the agency said were making the U.S. less reliable to honor its obligations are the Federal Reserve tightening monetary conditions via interest-rate increases to combat inflation. The central bank also continues to shed its massive balance sheet of mortgage-backed securities and U.S. Treasuries, furthering fostering an environment of tighter credit, Fitch said. The economy, the agency noted, is expected to slip into a “mild recession” in the fourth quarter of 2023.

Mandatory spending on Medicare and Social Security will intensify the pressure on the federal fiscal state as well, according to the CBO, Fitch cited.

“The CBO 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 under current laws, posing additional challenges for the fiscal trajectory unless timely corrective measures are implemented,” Fitch said.