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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.
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Now that is real "Hope and Change!" Keep printing the funny money Mr. Prez!
These are the agencies who were grossly negligent rating the CDOs. They should have been destroyed by that epic failure to correctly rate collapsing morttgage securities, but, hey, now they want to downgrade our debt. Let's see what they do about Portugal, Spain, Italy, Iceland and the countries which intervene to bail them out. When it comes to debt, America is the best looking horse in the glue factory. As for our government, it is now completely coin-operated. By the rich, for the rich.
Way to go B. Hussein Obama....try and weasel your corrupt self out of this one. What an embarrassment and shame to America. Even the threat of a downgrade is pathetic. This week's 1,000 plus pt. drop in the Dow (longest running week in the neg in more than 30 years), a possible downgrade, terrible economic news, and on, and on, and on, and on.....and ALL on Obama's watch.....IMPEACH Obama NOW. Get this INCOMPETENT OUT of office!
Did S&P, like Moodys, rate the subprime toxic debts as triple-A? If so, let's investigate the hell out them, and prosecute to fullest extent of the law those who broke the law.
Why not sell unused assets? I'm thinking about millions of unused acres of BLM and Forest Service land out West. Throw in a mothballed Forrestal-class aircraft carrier and Missouri-class battleship and you might find some willing buyers among the good guys of the world (I'm thinking about Taiwan, among others).
At this point, there's got to be budget cuts AND raised taxes. There's got to be. It's the only way to get out of this mess. I actually wouldn't mind paying higher taxes if I also saw the government trying to balance it's budget and be fiscally responsible. At least I'd feel a bit more confident that my money wasnt going down the drain. I blame Bush for getting us into this mess and plunging us into a costly, unnecessary war, AND I blame Obama and Congress today for behaving like petulant children fighting over a toy.
Well I guess the GOP got their wish anyway for creating a fight and making us look like school children who can't play together in the sandbox.
Thanks Obama and your Socialist Democrats. You are the king of ruination. You are EVIL and should resign..
Get real. This is the Tea Party's fault. Every last uncompromising bit of it.
The US needed to increase revenue by raising taxes (to pay for two huge wars). The Tea Party blocked the idea of a tax increase, and this is the result.
The world is rebelling against the Tea Party.
That's what happens......when you have just too MUCH debt!
So what?! China did not even has AAA credit rating. Oh I see, they don't need it because they pay every thing in cash. lol...
I wonder what my credit score would be if I was trillions in debt?
How can anyone honestly blame the GOP or Tea Party? The downgrade is because of our MASSIVE DEFICIT – which was just slowed down slightly by the TEA PARTY! If the GOP was in charge of all of congress, spending would have been slashed dramatically – and there would be NO DOWNGRADE. Get real folks!
F U TEATARDS! You're gambling with my 5 year old daughter's future you retarded cretins!
this is so stupid ... no one has advantage with degrading the dollars...it makes no sense
All you taking about Democrat control need to stop and look at the influence the minority in the minority party did during the conservative manufactured "debt ceiling debate" were able to exert. This fiasco is entirely the fault of the Tea Party. Nice job you racists, bigots and hate mongers.