Fitch's triple-A rating on U.S. debt is safe, for now, but that could change if "fundamental weakness" in the economy isn't addressed, Fitch Managing Director David Riley told CNBC Tuesday.
The newly signedlawraising the United States' borrowing limit is a "first step, but there is a lot more that still needs to be done to put U.S. finances on a sustainable path," he said.
Earlier Tuesday, Fitch said the risk of a U.S. sovereign default is "extremely low" and commensurate with a triple-A rating. The rating agency wants to see a credible plan to reduce the budget deficit and the rating will be reviewed at the end of August.
There are two things Fitch would like to see, Riley said: serious cuts in entitlements and an increase in revenue.
"There's been a lot of focus on discretionary spending, but it's actually the entitlements that account for two-thirds of federal spending," Riley said. The long-term demographics show an aging U.S. population, which will put "upward pressure on those programs in terms of spending, and that’s going to have to be addressed as part of the deliberations of the joint congressional committee" created by the law signed by President Obama earlier today.
As for revenue, Riley said that while taxes on individuals and corporations may be high, compared with elsewhere in the world, "the overall tax burden is not particularly high. It’s actually low by international standards."