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. db

    Three years of Hope and Change, and where are we? Down the tubes thanks to Palosi and the Obama nitwit administration of idiots.

    August 5, 2011 at 9:16 pm | Report abuse |
  2. Disgusted

    I believe in America. We've been through worse and survived, in fact, we've come out stronger. We are a great nation, a melting pot, full of freedom and liberty in every way, shape, and form.

    But I'm disgusted with both the Republicans (Tea Partiers included) and the Democrats. The comments section of this article show how fractured our nation has become. Both MSNBC and FOX's skewed portrayals of Democrats and Republicans have made enemies of our neighbors. What we need to do now is to stop bickering and work together! Please, for the love of all that's holy, please try not to see someone who differs in opinion with you as a "fat cat Republican" or a "pot smoking Liberal." Try and see them as someone you respect and know you need to work with to make America even greater.

    August 5, 2011 at 9:16 pm | Report abuse |
    • Guest

      Spot on – thank you. Enough with the useless bickering.

      August 5, 2011 at 9:23 pm | Report abuse |
  3. michaelfury

    http://michaelfury.wordpress.com/2009/04/11/the-rest-is-silence/

    August 5, 2011 at 9:16 pm | Report abuse |
  4. saywhat

    Wake up folks.
    Wars, military interventions, 700 bases around the world, bleeding us of trillions of national treasure (borrowed?) and costing American lives. Nick Turse writing in World News yesterday revealed quoting Special Operations spokesperson that our Special Forces are carrying out missions in 120 countries around the world. The number was 75 last year.

    What did you expect that we will prosper & be a welfare state??

    The mind set that put us on this path to self-destruction during the Bush-Cheney era of insanity still overshadows the thought process in Washington. What scares me is that these forces would push us into more military disasters to divert our focus from what really ails us while keeping us involved in Iraq, Afghanistan, Yemen & Libya.

    President Obama is undoubtedly surrounded by these elements and cannot even get a briefing which reflects ground reality , if one is to believe veteran Washington insiders.

    @ Julianne Feldmar

    That is absurd to say the least.

    August 5, 2011 at 9:16 pm | Report abuse |
  5. watcher

    Obama hip hopped while the US flopped.

    August 5, 2011 at 9:16 pm | Report abuse |
  6. Warren

    Seems that these guys at rating agencies wanted to keep their remaining (if any) credibility so they had to move. Still their credibility is in ruins and their future questioned. As for the US: it is not enough anymore to have the privilege to print the greenback like hell inflating debt, simply not enough to keep the AAA. Why shall we allow that these bubbles gamble away our future? It is a slight wake up call, hope will be heard.

    August 5, 2011 at 9:17 pm | Report abuse |
  7. steveNYC

    This is HILARIOUS! One nut is now blaming Cheney! 2.5 Years of Obama, (2 years with super dem majority in both houses) and the dems get no bame! HILARIOUS!!!!!!!!!!!

    August 5, 2011 at 9:17 pm | Report abuse |
    • saywhat

      Its really scary. There are those still out there who refuse to realize that Bush-Cheney era of insanity & greed had nothing to do with the mess we have landed into.
      2.5 years ? The consequences of the follies of that era are now hitting us & would continue for a long while. Unless of course we do something about the remnants of that era in Washington.

      August 5, 2011 at 9:55 pm | Report abuse |
  8. Richard Sisk

    There is plenty of blame to go around. Democrats and Republicans in Washington over the last 10 years have wasted trillions of taxpayer dollars and now we all have to pay the piper. The crooks on Wall Street have contributed just as much as the politicians. The silly way Congress handled the recent debt ceiling debate was just the icing on the cake. Thank the "Tea Party" for that.

    August 5, 2011 at 9:18 pm | Report abuse |
  9. steveNYC

    Another "crisis" for Obama administration to exploit! They must be giddy over there – I smell another phony stimulus coming!

    August 5, 2011 at 9:18 pm | Report abuse |
  10. PETER

    This is bogus.. these credit agencies should be investigated as they have way too much power..
    isnt buffet behind Moody;s?

    August 5, 2011 at 9:18 pm | Report abuse |
    • Warren

      This is exactly what the EU plans to do..for good reason let me add..

      August 5, 2011 at 9:21 pm | Report abuse |
    • Warren

      though this downgrade this time is justified no question, those comments that disagree here with this are all politics..

      August 5, 2011 at 9:24 pm | Report abuse |
  11. steveNYC

    Socialism/Liberalism/Communism have never worked out well in a FREE SOCIETY! The DEM AGENDA HAS FAILED!!! This is why the indepenent votrs ran the dems out of the house of reps last year in a LANDSLIDE!

    August 5, 2011 at 9:19 pm | Report abuse |
    • Barbara

      Steve.....the Dem's agenda has never had a chance. When they had all three branches+ , the Senate Republicans filibustered 270+ times. Now that the republicans have the majority in the house, the democrats cannot get anything through committee. The only way to get out of this mess is to invest (not spend) in America. That's what the government did to help recover from the Great Depression.......you know, the Hoover Dam, interstate highways, etc.

      August 5, 2011 at 9:37 pm | Report abuse |
  12. DAVID

    GEORGE BUSH INTEREST IS SURE OF A LOT HIGHER!!!

    August 5, 2011 at 9:19 pm | Report abuse |
  13. steveNYC

    51% of "tax payers" pay NO TAXES> many get back THOUSANDS in "refunds" . The ONLY people paying taxes are upper middle class and the RICH!

    August 5, 2011 at 9:20 pm | Report abuse |
  14. Nick

    So... Anybody else think S&P is overdue for an IRS audit?

    **** me? ... No no my friend **** YOU!!

    🙂

    August 5, 2011 at 9:21 pm | Report abuse |
  15. bawana

    way to go bagger's,,,hope you are happy now

    August 5, 2011 at 9:22 pm | Report abuse |
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