Obama administration official calls S&P analysis 'way off'
August 5th, 2011
09:34 PM ET

Obama administration official calls S&P analysis 'way off'

The Obama administration angrily responded to Standard & Poor's decision Friday to downgrade the U.S. credit rating, with one senior official saying the agency's "analysis was way off."

U.S. Treasury officials received S&P's analysis Friday afternoon and alerted the agency to an error that inflated U.S. deficits by $2 trillion, said the administration official, who was not authorized to speak for attribution. The agency acknowledged the mistake, but said it was sticking with its decision to lower the U.S. rating from a top score of AAA to AA+.

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

The White House is now in wait-and-see mode - hoping the decision and the S&P analysis face outside scrutiny, the official said.

"A judgment flawed by a $2 trillion error speaks for itself," a Treasury Department spokesperson said.

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 announcing the downgrade, S&P cited "political risks, rising debt burden; outlook negative."

"The downgrade reflects our opinion that the fiscal consolidation 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," the agency said.

Former Utah Gov. Jon Huntsman, who is among a field of Republican contenders for the 2012 presidential nomination, attributed the downgrade to "out-of-control spending and a lack of leadership in Washington."

"For far too long we have let reckless government spending go unchecked and the cancerous debt afflicting our nation has spread," he said in a statement. "We need new leadership in Washington committed to fiscal responsibility, a balanced budget, and job-friendly policies to get America working again."

CNN's John King and Dan Lothian contributed to this report.

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Filed under: Economy • Finance • U.S.
soundoff (197 Responses)
  1. E

    Too late. Too late. We are sliding into Ottoman Empire land. doomed.

    August 5, 2011 at 9:59 pm | Report abuse |
  2. David

    Obama ought to resign, and call an election ASAP.

    August 5, 2011 at 10:00 pm | Report abuse |
    • JFritz

      Sure hope you thought about this. We really don't need any more instability. Don't you realize that all of that debt is money spent in the past, and that two unfunded wars led us to this?

      August 5, 2011 at 10:04 pm | Report abuse |
    • The Snowflake Kid

      I'll be voting for Obama in the next election, and so will the majority of Americans. The Conservative Crazies have gone too far this time.

      August 5, 2011 at 10:07 pm | Report abuse |
    • db

      This is Republican policy. Boehner stated he got 98% of what he wanted in the debt ceiling negotiation.

      August 5, 2011 at 10:08 pm | Report abuse |
  3. brian

    Sounds more like they were downgrading our Congress (but they deserve an F-)

    August 5, 2011 at 10:00 pm | Report abuse |
  4. Jason M Cook

    "For far too long we have let reckless government spending go unchecked and the cancerous debt afflicting our nation has spread," he said in a statement.

    Yes, see years 2001-2009.

    August 5, 2011 at 10:00 pm | Report abuse |
  5. Chief Flying Eagle

    Just send the navy seals to solve s&p problem

    August 5, 2011 at 10:00 pm | Report abuse |
  6. The Snowflake Kid

    Conservatives believe that "Deficits don't matter." when they are in power. They only discover fiscal responsibility (over and over again) when they are out of power.

    Conservatism added over $8.5 trillion to the national debt for no reason, sent Americans to Iraq looking for WMDs (weren't there), sent Americans to Aftghanistan looking for Osama bin Laden (wasn't there), and twiddled their thumbs while our economy slid off a cliff.

    Conservatives have NO right to look down on ANY one.

    August 5, 2011 at 10:01 pm | Report abuse |
  7. I Can Read

    BTW Dems whining about the recent bickering over raising the debt ceiling remember......They could have raised this debt ceiling back in 2010 as well unilaterally.....but they wanted political cover.....dont know why since apparently few actually care about the details

    August 5, 2011 at 10:01 pm | Report abuse |
  8. Homero

    Why is the WH so angry about this? They have been protecting the rating agency clowns for ages, saying that their ratings are only opinions, hence protected by the 1st amendment. And now, when S&P found the courage to do this long overdue call and the opinion does not favor the government, they are outraged. Poetic justice.

    August 5, 2011 at 10:01 pm | Report abuse |
  9. David

    CNN, Your job now is to make sure Obama doesn't get blamed for this. I'm sure you have an article or two in the making to shift the blame to Republicans.

    August 5, 2011 at 10:01 pm | Report abuse |
    • db

      That's just called reporting the facts.

      August 5, 2011 at 10:21 pm | Report abuse |
  10. Bull

    This is just the start. Tomorrow Obama will blame it on Ford and then next week probably Ike. he will never admit he is just wrong! we need another Reagan!

    August 5, 2011 at 10:02 pm | Report abuse |
  11. The Snowflake Kid

    I only have one millionaire friend, who owns a regional chain of restaurants. We have a few drinks every now and then. She told me once, "Every dollar I pay an employee is the same as stealing bread from the mouths of my children."

    Most of her employees, of course, are illegal aliens.

    Her children drove their Porsches to their tennis lessons.

    August 5, 2011 at 10:03 pm | Report abuse |
  12. sad

    This "White House official" has zero credibility, which is why he is anonymous. It's the same as a losing sports team blaming a confirmed loss on the referee. FACT: US credit rating is AA+ by S&P

    The White House disagrees? Prove it. Also, S&P can in fact be sued if they knowingly downgraded based on a miscalculation (they are not liable for opinion, but are liable from knowing or reckless failure). So sue! You can't though, cause you were downgraded legitimately and fairly base on other considerations! The calculation stated in this article isn't mentioned in the downgrade!

    August 5, 2011 at 10:03 pm | Report abuse |
    • The Snowflake Kid

      Fact: The S&P has shown itself to be a branch of the Republican Party by this blatantly political decision.

      August 5, 2011 at 10:08 pm | Report abuse |
  13. John B

    The Government is like a drunk in denial who doesn't have a drinking problem. We don't have a problem it is everyone else don't you understand. Until there is some major changes from both sides with major reduction in the size and scope of the government things will continue to be out of control and running down hill.

    August 5, 2011 at 10:04 pm | Report abuse |
  14. seriously?

    It doesn't matter if S&P is 'way off'. These are the people that set the rating, and the rating affects our ability to borrow money, interest rates, etc. Our interest rates aren't based on how on the spot or how far off S&P's analysis is, they are based on the rating itself.

    If you are applying for a job and HR wants a master's degree, it doesn't matter if a degree is going to help you perform your duties or not, what matters is the piece of paper saying you've completed that level of education. You may be have years of experience doing this type of job, you may be able to perform the duties inside and out in your sleep, but if you don't have the degree your application isn't going to make it's way out of the pile of applications in the HR office. It may not be fair, but it is the way it is. In this case, the US just lost their master's degree.

    August 5, 2011 at 10:04 pm | Report abuse |
  15. Luc

    S&P analysts should be fired and the company should apologize for its miscalculation and explain why a $2 Trillion mistake has no impact on its rating.

    August 5, 2011 at 10:04 pm | Report abuse |
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