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.

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soundoff (678 Responses)
  1. who pooted

    The blame lies squarely with the Republican party and the right wing extremists that control it. The President has bent over backwards to work with these idiots . What a mistake. Obama and the Democrats need call these people out and condemn them. No more bipartisanship until the Republicans can clean up their act. Boehner is taking orders from tea baggers who don't believe in paying their debts, and are only too happy to announce it on tv. No wonder our creditors are terrified.

    August 5, 2011 at 9:54 pm | Report abuse |
    • pauly

      your an absolute idiot......

      August 5, 2011 at 10:03 pm | Report abuse |
  2. Jay - Michigan

    test

    August 5, 2011 at 9:54 pm | Report abuse |
  3. Jay - Michigan

    The Jersey Shore cast could run congress better.

    August 5, 2011 at 9:56 pm | Report abuse |
  4. Mmmmm

    O please! Just trying to cause dumb cattle to stampede. I toldjah Obama to put a leash on the dogs now they are biting the hand that feeds them. Goodforya!

    August 5, 2011 at 9:58 pm | Report abuse |
  5. DAVID

    all this damage to America all because they hate the president??? yikes...

    August 5, 2011 at 9:59 pm | Report abuse |
  6. DAVID

    maybe Obama should have used that 14th amendment afterall what a USELESS CONGRESS!!!

    August 5, 2011 at 10:00 pm | Report abuse |
  7. ladylike

    From S&P:

    "We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues...”

    and…

    "The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy."

    THANKS A LOT REPUBLICANS! THAT'S GREAT FOR THE ECONOMY, YOU A**HOLES!!

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

    Thank you Republican pigs and Teabaggers that didn't google the world teabagging before calling themselves that.

    August 5, 2011 at 10:05 pm | Report abuse |
  9. Mark

    This is the fruition of the Republican plan to not compromise. It will only get worse when the Supercongress cannot agree on cuts and spending gets slashed everywhere. Will their tactics get them elected in 2012? I doubt it.

    August 5, 2011 at 10:05 pm | Report abuse |
  10. bob

    Well i'm almost 70yrs old...I was born during ww2 and watched the Korea war and i was part of the Vietnam war...Irag an afganistan. But I gotta say...This downgrading of America's credit rating is something I would never believe...This move by S&P could spin europe into a terrible depression and guarantee America another recession at best.

    August 5, 2011 at 10:06 pm | Report abuse |
  11. DAVID

    toos the bums in congress out asap...they dont deserve to work for America!!!

    August 5, 2011 at 10:08 pm | Report abuse |
  12. Mmmmm

    Never seen so many smillin' faces...smilin' faces tell lies....

    August 5, 2011 at 10:14 pm | Report abuse |
  13. Henry

    Screw what S&P says. Buyers of US debt don't need the opinion of these Bozos. Fifty years ago, S&P and similar agencies had access most people didn't have. That's not the case today. S&P and others of their ilk are a brood of self-important, arrogant jerks. Track them down and shoot them in their heads.

    August 5, 2011 at 10:16 pm | Report abuse |
  14. DAVID

    all the posing and posturing during the debate meant americas credibility would be called into question boehner and cantor knew exactly what they were doing....sticking the knife into the back of America!!!

    August 5, 2011 at 10:17 pm | Report abuse |
  15. DAVID

    Republican plan = punish Americans taliban style for voting them outta office....Republicans = achieveing for alqaida what they couldnt...bringing America down!!!

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