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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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The tea bagger had everything to do with this downgrade. They are the ones that stated they would never compromise or raise the debt ceiling which has to do with paying debt already on the books. Well, this down grade will up what YOUR children pay on the current and future debt service by 5 to 10 basis points. Just keep voting for the teatards.
Obama spent the cash not the tea party. Blame the man in the White House. I wish I never voted for him. Worst thing I did to my children.
All the commentors blaming the GOP are funny. The GOP were the only ones who want to seriously cut spending.
This is the Obama Presidency and the Democrats controlled Congress and the Senate from 2006 to early 2011.
Thank you Tea Party.
Do you remember 2 wars and tax breaks for the rich that weren't paid for?
30% of the US economy comes from government spending so how does cutting spending improve the economy?
The problem is income, enforce existing tax laws, close loopholes for big corporations and the ultra rich and make sure everybody pays their fair share and the problem will be solved.
LOL. More ignorance.
1) Obama continues the wars and tax cuts
2) Cutting "loopholes" and raising taxes on the rich will not even close 20% of the $1.4 trillion dollar deficit. I mean, I know you can't do basic math, but even the Democrats agree on this.
I'm going to trade my dollars for sea shells.
FIRE CONGRESS!!!
Sorry Bill, but Obama couldn't shine Bush's shoes even on a good day... Wishful thinking on your part. O is the by far our worst (president) ever.
Most Americans vehemently disagree with you. We will be haunted by Bush's ineptness for decades.
Watch the U.S. economy really fall after this news.
If you don't think the republicans are responsible for this then you are wrong. I am a republican and I have seen the party decline since Bush was in power. Elect stupid people and you get stupid results.
Change we can believe in. Can you afford four more years.
Obama and the Dems were at least willing to compromise and give away everything their base cares about...what did the other side do? Say NO!
The Party of No strikes again!
Actually, anyone who's not living on credit (including the gvmt) will come out of all this in pretty good shape. In society, it's always relative.
GD republicans so focused on bringing down our President they're bringing down the WHOLE COUNTRY –
This from the same agency who accepted millions to rate junk securities AAA? Something needs to be done about them, Moody's, and Fitch
I'm not very smart but this smells like political BS .....this can be solve very easy let the Bush tax die.....and 8 years of Bush 2 wars the debt ceiling raise 7 times and Obama is the problem ? give me break !!!!
You could have abbrevieated your statement to the first four words. It would have said the same thing.
Nice going OBONGO! Goes to show the nation what happens when you vote in an ape.
Racist jerk