[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."
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[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
How is that "no raising taxes" thing working for you? Everyone still in love with Grover Norquist and his pledges?
The headline says they have done it (which may be justified, but it likely to undermine the economy even more), yet the story says they are thinking about doing it but may not.
If they've done it, report it as fact and the country will pay a price for our irresponsible spending over far too many years. If they have NOT done it, reporting that they have is incredibly irresponsible.
They did it. Its done.
Anyone with half a brain realizes we need to increase revenues (Short Term) and cut spending (Long Term) to get out of this mess.
Apparently the libs have moved on from screaming and squawking about the Koch brothers to Norquist. 99% of people have no idea who either of them are (including the libs), but that doesn't stop them from trying to lay blame for this mess anywhere but where it belongs – the front door of the White House.
S&P announced weeks ago that this would happen unless we raised the debt ceiling and cut 4 trillion out of our deficit, not unless we raised taxes. In fact raising that much in taxes would kill our nation. So how is that, "We can't make that big of a cut" working out for you now? Thanks Dems and Pres for throwing our nation under a bus rather than doing what the president's own budget commission told him had to be done. WOOHOO!
Walter, don't assume liberals are as stupid as you are. And for your info, I'm not a Democrat – I am an independent who, sorry to say, voted for Bush.
WhatGuy – what are you talking about. The President wanted $3 of cuts and $1 of increased revenues for a $4trillion decrease. The Republicans couldn't get $4trillion in cuts, and they refused to have any revenue increases, So they settled for $2trillion in deficit decreases. We can't solve all our problems by reducing spending – anymore than you could pay all your bills if your boss made you work full time at half pay.
You are all Obamots. Every dime of every person earning more than $250,000 a year can be confiscated by Barack Hussien Obama and it wouldn't start to dent the debt. The tax thing is just a Progressive/Marxist tool in the quiver of the fat cat Dems.
Yes it't tea party's fault. They created this huge debth in few months, it wasn't democrats for 4 years in power!
I wrote this about 1 1/2 years ago my prediction are coming true.. To the President of The United States: You are doing an excellent job in guiding this country to the direct path to prosperity. No one said it was an easy job, I do always say that being President is not experience but from the good heart. I canâ€™t believe how the American people are so blind sighted. The American people expect the Democrat to try to fix the economy in 2 years, which the Republican destroyed in 8 years. Well to all my fellow Americans this nightmare is just the beginning. The first 2 to 3 years is to stabilize the economy. The next 5 to 7 years is a very moderate progressive growth or it could be longer if the Republican comes to win 1 term for the White House. But letâ€™s assume that the Democrat do stay than our economy would be back to the days that the Clinton administration was. When the American people were free. But if the Republican's win the 2012 election, to me this is what is I expect from them. The list below is just the tip of the Republican's bloody treasonous corruption, subversion, and malfeasance iceberg. We can't easily forget other Republican fiascoes like Watergate, Iran/Contra, huge budget deficits, wasteful military spending, or the support of corrupt right-wing dictators like Pinochet in Chile, Marcos in the Philippines, Duvalier in Haiti, Noriega in Panama, Diem in Vietnam, Amin in Uganda, Banzer in Bolivia, Batista in Cuba, Cordova in Honduras, Pol Pot in Cambodia, Somoza in Nicaragua, Suharto in Indonesia, Trujillo in Argentina, Hussein in Iraq, and many others. And what I do understood that there has been reports that Osama bin Laden, the terrorist responsible for 9/11, was trained and backed by the CIA during the Reagan administration. In addition to the above scams, that have already cost the American people a mountain of their tax dollars, the Republicans in Congress are busy cooking up a whole bunch of new recipes for rip-offs, and they include the following new tasty treats for the benefit of their favorite fascist billionaire and lobbyist: â€˘ New Social Security Privatization Schemes (So Corporation donâ€™t have to pay in the SS 7.65% this is profit in their pockets) â€˘ Repeal of the "Capital Gains Tax" â€˘ Repeal of the "Corporate AMT Tax" â€˘ Flat Tax â€˘ National Sales Tax â€˘ Tort Reforms â€˘ School Vouchers â€˘ Paperless Voting Machines â€˘ Genetic Engineered Food Without Labeling â€˘ Copyrights and Patents Extended Forever â€˘ New "Patriot Act" Laws That Limit Our Rights â€˘ Cuts In Overtime Pay Regulations â€˘ Future Budget Deficits Designed To End Social Safety Net Programs â€˘ Future Budget Deficits Designed To Bankrupt The Federal Government â€˘ The End of the Minimum Wage â€˘ The End of the Department of Education â€˘ The End of Medicare â€˘ The Beginning of Faith Based Initiatives â€˘ More Un-funded Mandates To The States â€˘ More Outsourcing of Jobs â€˘ More Corporate Welfare â€˘ More Right-Wing Extremist Nominated To Federal Court Positions â€˘ More Prisons To House The Drug Users and Credit Card Abusers â€˘ New "Free Trade" Partners In Third World Countries â€˘ New Batch of Off-Shoring of U.S. Factories â€˘ New Wars Against "The Enemies of Democracy If this is what the American people want than be ready for a new nightmare, this would make hell like a sweet dream. I Always say be careful of what you wish for. Your wish may make it happen. I honestly believe that you President of the United States of America will be reelected for a second term and will lead us out this nightmare. Mr. President you are not alone in this endeavor, you do have the support of the American people. I always say the harder the problem are the easier is the solution. May God Bless you and guide you in these difficult times. I know you will succeed and the American people know to. I always say YES WE CAN only the President can...
Thank You Tea Party for the destruction of our way of life.
So ridiculous and uninformed it's hard to know what to say.
Completely out of control spending has nothing to do with it.......you are literally too stupid to insult.
So ridiculous and uninformed it's hard to know what to say."
anyone that thinks this isnt the fault of the GoP and the Tea party is a r-tard.
Thank you Obama. Well done. You have accomplished what Moscow could not.
Shouldn't you be thanking us for supporting your insane lifestyle with mandatory taxes for so long? We're done with it, bro Deal with the fact that those of us paying the taxes are tired of the theft...
This is certainly the tea party's fault. They were willing to play with America's debt and reputation just to bring the president. I am not uninformed moron. The tea party is an ignorant bunch unwilling to believe in climate change, science, economics or any book learnin. The tea partiers should be tried for treason.
wow...you are seriously uninformed. this is the kind of brain dead hillbilly that's on this board. please go get some education before you blame the tp for thiis
Mark, it is the fault of both sides, however as a matter of point, if we had cut more as the tea party wanted, S&P wouldn't have done this, since they announced weeks before the president's "amazing" deal that only cuts just over 2 trillion, that any raise of our debt ceiling without at least 4 trillion in cuts along with it would result in this. Apparently the idiots in washington (on both sides of the aisle) decided to call their bluff, and they were not bluffing.
Looks like we all lose again. Just like everything else Obama has shoved through without regard to how others feel about it.
If your way of life is living off the dole or you are an illegal alien living here off the system then I can understand you are upset. Dont blame the only party right now that is holding Washington accountable.
The Tea Party wanted to STRENGTHEN our credit rating!!! Obama and the out of control soending libs did this. DON'T YOU GET IT?
When you want to get a better credit score, do you spend more money than you can pay back??
The Tea Party are the only sane people in Washington! You don't get it, we're spending $4 BILLLION more than we take in every day! and no one other than the Tea Party want to actually fix the problem. You do the math. We're heading for Bankruptcy!
This is a crock. Everyone knows S&P can be bought and sold by corporations for their ratings. And good lord – we've been in more perilous shape in our history with a AAA credit rating.
So now they pretend like they are independent and take moves to ruin our country while helping themselves?
I hate S&P – if I knew how to boycott them, I would.
Who the F__k! do you think that your beloved Tea Partiers and Grover Nyquist SHILLS actually work for?? Wake UP!
I agree Lisa....Moody's and S & P are both shady since they graded all those asset back securities are "risk free" right before they were toxic.....I believe China's rating agency called it earlier this week.
Friday evening at 2030 Eastern Time? Are they kidding? Hit & run is illegal in every state.
wooooow. the obama legacy is going to be awful! and to think it started so promising
It's not just an Obama legacy. It's an indictment of Bush, Obama, democratic and republican controlled governments, and also our populace. Our country has lost the ability to think long term and have zero patience for anything longer than a 10 second sound byte. There is only a select segment of the population that is better off now than 20 years ago.
We reap what we sow.
If you had just ONE Clue it would be a good start! Quit watching FOX news and listening to Rush Limbaugh for a start.
The Obama administration should simply order S & P to stand down and keep the AAA rating intact – just like he's ordered Americans to comply with the provisions of Obamacare and saddled Americans with trillions in debt.
Since the health reform doesn't start until 2014, how exactly has that added "trillions in debt" Don't be a dufus.
PatSJ, the same way we "cut" just over 2 trillion in spending with the new bill to raise the debt ceiling, in cuts that haven't started and will take 10yrs to fully come to fruition.
...and illegal immigrants.
This downgrading brought to you by the 2011 Tea Party. Way to go guys...
Do you understand credit and debt? You think S&P wanted us to borrow more and throw us further into debt?
The Tea Party just wanted some real cuts. That would have HELPED us with S&P.
Thank you Obama!!!!
Ah, another knee-jerk response to a complex problem. How refreshing.
Brain surgeon or rocket scientist at the least. I grieve for our Country and everyone that have died for it!
This is what wars do to a country...
No, this is what completely irresponsible spending at all turns and levels of a government will do to a country. The wars didn't put us this far in debt by themselves, abused social programs creating generations of lazy do nothing people who suck off the public teat and feed off the work of others didn't do this to our nation on it's own, politicians who spend billions on bridges to nowhere to tell their home town fans they brought money in didn't do this to our nation on it's own, cutting taxes didn't do this on it's own, creating an entire useless agency of idiots (homeland security) that pretty much does nothing that wasn't being done by others before didn't do this on it's own, However, when you put all those things and more together, over 50 or so years of similar ideas, and that is what does this to a nation
And none of the cable news channels are covering this live. LOL the US is going to hell in a handbasket.
LOL. Well that's certainly egg on S&P's face. First they're slow to downgrade banks and mortgage companies in the subprime credit crisis of 2008. Now they're too fast in threatening to downgrade the US because they don't know how to work their own models. Maybe they should just fire everyone working there so that they can all join the ranks of the growing unemployed as a result of S&P's callous stupidity.
So Obama is going to sic the IRS, DOJ and ICE on S&P and shut them down! How dare they affect his unlimited credit rating. He can always pay his bills because he can print all the money he wants any time he wants. Well, Standards and Poor you are really in big trouble now!
Where the H_ll have you heard that Obama is doing any of that? Wake up, pay attention to something other than FOX, Limbaugh, 700 Club. Good God man quit being a Sheeple!
Why is S&P getting involved in a Political fight?
This is GREAT news for the Obama administration! Another "crisis" that they can use to bring about more "change". Marx is dancing in his grave.
Dumb F__K ! Go back to sleep.
So where are the Obama's partying tonight ? I suppose they need the nightly party circuit to keep their spirits up during these trying economic times.
In the long run, it will help us turn around, I hope. The simple fact, however, is that the mainstream members of the two major political parties (who are no different from one another) are responsible for this, as well as Bush and Obama. All of them – every last one - should be removed from office for this travesty and disgrace. It's absolutely disgusting and horribly embarrassing to us as a first world nation.
This should come as no surprise. Neither Democrats or Republicans are willing do anything to address our 14.5 trillion dollar debt. Republicans refuse to raise taxes, and all Democrats want to do is spend more stimulus money. I'm actually glad there is someone that can tell Congress – "you're not doing your job," and have something to back that threat up with.
True. I wish such a lesson wouldn't cost us billions more - but perhaps there simply is no other way. This is an indictment of our population as much as our political leaders. Sad.
Ditto. Its really not hard to get out of debt. The model anyway is easy.
Cut what you pay out, add to what you pay in. Cut spending across the board so the sacrifice is shared, and raise taxes/cut loopholes to increase revenue.