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US Rating 'Will Remain Under Pressure': Fitch

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."

He noted the U.S. has plenty of room to increase taxes on consumption, as well as revamp a tax code that has "become increasingly complex and riddled with tax breaks and allowances."

Riley said one of the strengths the U.S. has is "monetary and exchange-rate flexibility" through the Federal Reserve. But while the Fed may feel it has to implement another round of stimulus, it might "signal to us the recovery is stalling."

If Standard & Poor's, Moody's or even Fitch downgrades the U.S. from triple-A, he said, it "wouldn’t be the end of the world. Treasury securities are still the safest dollar asset there is."

What would be damaging would be if a downgrade was followed by what he called "further negative action."

"We believe the [debt ceiling] agreement alleviates near-term risk," he said, but the "rating will remain under pressure for some time."

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