Fitch Ratings delivered a blow to the credibility of U.S. debt Tuesday evening when it downgraded the country’s credit rating from AAA to AA+.

The last time one of the top three ratings firms made this call was in 2011 by S&P Global Ratings. Stocks slid Wednesday as investors took in Fitch’s scathing assessment.

The tech-heavy Nasdaq ended the trading day down 2.17%, its worst since February. The S&P 500 fell 1.38% and the Dow Jones Industrial Average dropped 0.98%.

The firm said the downgrade was based on expected fiscal deterioration over the next three years, a growing government debt burden, and the erosion of governance compared to other top-rated countries. Fitch reportedly cited Jan. 6, 2021 as an example during a meeting with Biden administration officials.

In its commentary, Fitch pointed to reoccurring standoffs over the debt ceiling and last-minute deals that have hurt confidence in fiscal management.

(T)he 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,” Fitch said.

Committee for a Responsible Federal Budget Senior Vice President and Senior Policy Director Marc Goldwein emphasized a AA+ rating still means U.S. debt is extremely safe.

We are the reserve currency of the world. We are the backbone of the global financial system and so even though Fitch is right, our political system is broken, our debt is unsustainable, we’re still the finest looking horse in the glue factory and still the safest place to park large amounts of money,” Goldwein said.

He said Fitch’s downgrade affect households, or even markets over the long- or medium-term. The risk, he said, is if it’s a gateway to further downgrades, which could lead to higher interest rates, slower economic growth and a generally weaker economy.

Fitch projected the U.S. economy will enter a mild recession at the end of the fourth quarter of this year and first quarter of next year, citing tightening credit conditions, weaker business investment and a slowdown in consumption. The firm expects real GDP growth to slow to 1.2% this year for overall growth next year to be just 0.5%.

Treasury Secretary Janet Yellen disagreed with Fitch’s downgrade, calling it “arbitrary and based on outdated data.”

In a statement, White House Press Secretary Karine Jean-Pierre echoed Yellen, saying, “it defies reality to downgrade the United States at a moment when President Biden has delivered the strongest recovery of any major economy in the world.”

She pointed blame at “extremism by Republican officials.”

“(F)rom cheerleading default, to undermining governance and democracy, to seeking to extend deficit-busting tax giveaways for the wealthy and corporations — is a continued threat to our economy,” Jean-Pierre said.

The Republican Party put the onus on President Joe Biden and Democrats.

The downgrade comes just months after Biden and congressional Democrats took the country to the brink of default and amid an increasingly unsteady economic path. Meanwhile, government spending under Biden continues at an breakneck pace in the shadow of a high national debt and rapidly rising federal deficit,” the party said in a tweet.

Goldwein was mindful the political reaction to the downgrade might prove Fitch’s point.

“I’m worried this is actually gonna create more divisiveness, which is actually going to feed right into the very thing that the downgrade warned about,” Goldwein said.