S&P downgrades U.S. credit rating
August 5th, 2011
09:44 PM ET

S&P downgrades U.S. credit rating

[Updated at 9:44 p.m. ET] Referring to the Obama administration's contention that Standard & Poor's analysis of the government's finances was off by about $2 trillion, a Treasury Department spokesperson said: "A judgment flawed by a $2 trillion error speaks for itself."

The Standard & Poor's rating agency announced Friday evening that it has downgraded the U.S. credit rating to AA+ from its top rank of AAA.

On Friday afternoon, hours before S&P publicly announced the downgrade, the agency revealed its plans to the Obama administration and sent an analysis to the Treasury Department. The senior administration official said the analysis inflated U.S. deficits by $2 trillion.

Treasury analysts contacted S&P and challenged the analysis, and S&P acknowledged the mistake, the official said. But S&P said it still would stick with its decision to downgrade the United States' credit rating, according to the official.

"This is a facts-be-damned decision," the senior official said. "Their analysis was way off, but they wouldn't budge."

The official the administration can do nothing now but hope that S&P's decision and analysis faces outside scrutiny.

"These guys make Congress look good," the official said of S&P.

[Updated at 8:59 p.m. ET] Credit rating agency Standard & Poor's on Friday downgraded the credit rating of the United States, stripping the world's largest economy of its prized AAA status.

In July, S&P placed the United States' rating on "CreditWatch with negative implications" as the debt ceiling debate devolved into partisan bickering.

To avoid a downgrade, S&P said the United States needed to not only raise the debt ceiling, but also develop a "credible" plan to tackle the nation's long-term debt.

In its report Friday, S&P ruled that the U.S. fell short: "The downgrade reflects our opinion that the ... plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics."

S&P also cited dysfunctional policymaking in Washington as a factor in the downgrade. "The effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges."

iReport.com: What does this mean for the U.S. economy? Share your thoughts on video.

[Initial post, 7:15 p.m.] The Standard & Poor's rating agency served the Obama administration with notice Friday afternoon that it planned to downgrade the U.S. government's AAA credit rating, an administration official told CNN.

But S&P has yet to make its ruling public, and the source told CNN the agency is reconsidering after the administration challenged S&P's analysis of the government's finances.

The source, a senior official involved in the discussions, said the agency was off by "trillions" in its economic model and was now working to revise its analysis.

S&P did not return repeated calls for comment.

The official described the talks as a "moving target" and said "it's clear some people there still want to go forward" and downgrade U.S. debt.

Rumors swirled for most of the day Friday that S&P was preparing to make its move. But even several hours after the market close, official notice had yet to materialize.

FULL STORY
soundoff (678 Responses)
  1. outawork

    Wait till next years hyperinflation. Our credit rating will ZZZ-. I can't wait to get my first billion dollar federal reserve note.

    August 5, 2011 at 8:53 pm | Report abuse |
  2. John

    "The End" by The Doors (partial lyrics)

    This is the end
    Beautiful friend
    This is the end
    My only friend, the end

    Of our elaborate plans, the end
    Of everything that stands, the end
    No safety or surprise, the end
    I'll never look into your eyes...again

    August 5, 2011 at 8:53 pm | Report abuse |
  3. skibumCA

    Memo to Americans, WAKE UP! Smell the coffee! It is time to remove President Obama from office! He is obviously only capable of destroying our great country and the foundation our founders built. What a shame, he should resign, it is the right thing to do.

    August 5, 2011 at 8:53 pm | Report abuse |
    • andrew

      You are a damn fool if you honestly believe Obama is to blame for this.

      August 5, 2011 at 8:55 pm | Report abuse |
    • Joe

      We're stuck with him until we vote him out of office. If we remove him by other means then his presence really would mark the end of the greatest country on earth (no offense to Canada, eh.)

      August 5, 2011 at 8:56 pm | Report abuse |
    • Joe

      Andrew, he sure as hell ain't helping matters.

      August 5, 2011 at 8:56 pm | Report abuse |
    • Fig1024

      And put who in, exactly? Any Republican / Tea Party would just push further to the right – same direct Obama been going, just more extreme. And there are no strong candidates on Democratic side

      August 5, 2011 at 9:07 pm | Report abuse |
    • Thomas Howard

      I voted for him, and I'll admit that I'm disappointed by what he's done in office thus far. That being said, his presidency looks like Lincoln's compared to Bush. 9/11, the Katrina debacle, 2 trillion dollar wars, cutting taxes for the "job creators" who have only used the extra capital to inflate their CEOs' salaries and ship jobs overseas by the hundreds, almost everything that happened in the buildup to the banking crash, and the list goes on and on. You should try reading more of things that aren't published by Fox News.

      August 5, 2011 at 9:11 pm | Report abuse |
  4. JohnnyYuma61

    This may be the beginning of the currency Crisis Ron Paul told you about. Let's see, he ran as a Libertarian, then as a Republican, and once again as a Republican. Three strikes and you're out. What say you America?

    Ron Paul 2012!

    August 5, 2011 at 8:53 pm | Report abuse |
    • Fig1024

      The problem with Ron Paul is that he'd have no support in Congress. Congress makes all the laws, not President. So little would change

      August 5, 2011 at 9:09 pm | Report abuse |
  5. Independentmind

    You liberals on here are really lost... What does the Tea Party have to do with this downgrade? The markets wanted the country to cut it's spending (Just like the Tea Party wanted) and the liberal held Whitehouse and Senate didn't want to hear it. Only way you can raise my taxes is if you completely do away with Obamacare and cut or reform all spending to include Social Security. Only then will I agree to tax increases.

    August 5, 2011 at 8:53 pm | Report abuse |
    • Thomas Howard

      Um, maybe the fact that they made popular this "no compromise!" mantra that brought us to the brink of default in the first place.

      August 5, 2011 at 8:56 pm | Report abuse |
    • Catherine

      Thank you! A voice of reason on this blog finally..

      August 5, 2011 at 8:57 pm | Report abuse |
    • Catherine

      "The credit agency said late Friday that it was making the move because the deficit reduction plan passed by Congress on Tuesday did not go far enough to stabilize the country's debt situation”
      We did not cut enough debt… The Tea Party is actually correct in what they were demanding..

      August 5, 2011 at 8:58 pm | Report abuse |
    • Martha

      Your taxes are not going to be raised you nitwit unless you are making over a quarter million dollars or more a year which you probably arn't or you would know how to interpret what you read and hear.

      August 5, 2011 at 8:59 pm | Report abuse |
  6. Daren

    I feel the rating should be lower still. This country is running on borrowed time, and it really needs to wake up, or we will be looking for handouts from others, and we know how generous they are!

    August 5, 2011 at 8:53 pm | Report abuse |
    • Catherine

      Agreed..

      August 5, 2011 at 8:59 pm | Report abuse |
  7. Chris

    Keep those comments coming, folks. If you all can't do anything but point fingers and complain, it's no wonder Congress can do no better.

    August 5, 2011 at 8:54 pm | Report abuse |
  8. Dave

    Hillarious that folks are blaming Tea Party for the downgrade.....yep, it makes sense that you'd sooner blame the folks that JUST got into office and are the few who have the nerve to stand by the principles that they ran on (an unheard of thing in Washington) rather than the insane, detached from reality lawmakers like Barney Frank who intend to strangle private industry to death until we are a bankrupt welfare state.....yep, make complete sense.....you make us Americans proud in your well thought out theses!!

    August 5, 2011 at 8:54 pm | Report abuse |
  9. AA+

    The US spends $1.40 for every $1.00 it brings in. Even a simpleton (i.e. most commentors here) can understand that's nt a good thing.

    August 5, 2011 at 8:54 pm | Report abuse |
  10. phil

    Obama's socialism will not bring jobs back. Socialism only destroys jobs... Look around world were they have tried socialism.

    August 5, 2011 at 8:54 pm | Report abuse |
    • Martha

      Can you define socialism?

      August 5, 2011 at 9:07 pm | Report abuse |
  11. bill

    Interesting that you said "shine shoes"

    August 5, 2011 at 8:54 pm | Report abuse |
  12. Roko

    Nice job liberal morons. Thanks you for electing an unvetted, unqualified race-hustling poverty pimp to the most important office in the world. I hope you all suffer the worst possible economic consequences of your utter stupidity.

    August 5, 2011 at 8:54 pm | Report abuse |
    • Martha

      Have you thought about anger management therapy? AA? Help somewhere?

      August 5, 2011 at 9:10 pm | Report abuse |
  13. Mark

    Obama promised change and he did not deliver. Now I want change and I will deliver on election day. I hope others will do the same

    August 5, 2011 at 8:54 pm | Report abuse |
    • Daren

      We got change, just in the wrong direction and too fast to "change" it the right way. If it doesn't work, do it more and faster, maybe that will fix it.....

      August 5, 2011 at 9:07 pm | Report abuse |
  14. Melissa

    Balance was the Obama way. I didn't vote for him last time, but he was the only one talking sense this last month. Everyone else was after soundbites and political points scoring. So short sighted and small minded. If the Tea Party think they have served their voters well...they are sorely mistaken. The Not so Grand Old Party now....

    August 5, 2011 at 8:55 pm | Report abuse |
  15. Can America Wait till Nov to get REAL change

    America has been downgraded first time since 1917, what else do you need to know about Obama, Polisi, and Reid, the THREE STOOGES

    August 5, 2011 at 8:55 pm | Report abuse |
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