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.

soundoff (678 Responses)
  1. DAVID

    America is burning and congress is in recesssss????? WOW!

    August 5, 2011 at 10:22 pm | Report abuse |
  2. C. E. Adkins

    It is about time someone told the Congress & the President that you can't have it both ways....a Perfect Credit Rating & a Empty Wallet.

    I have to balance my checkbook & it is about time the government does the same. QUIT SPENDING MONEY YOU DON'T HAVE!!!

    August 5, 2011 at 10:24 pm | Report abuse |
  3. charlie

    This is a selfish publicity stunt by S&P. Free global press.

    August 5, 2011 at 10:25 pm | Report abuse |
  4. DAVID

    i hope the republican congress can sleep well tonight...ba_ _ _ _ _ds!!!

    August 5, 2011 at 10:30 pm | Report abuse |
  5. J Sechrist

    This just shows that the House and Senate have no idea what they are doing economicaly. All the posturing and fingure pointing and waiting for the last possible moment to pass a bill that does next to nothing has resulted in a huge stock market sell off and now S&P has reduced the country's credit rating. And then they go on vacation for 5 weeks? What the hell are we paying them for anyway? If this was any company anywhere in the world, they would all be fired.

    August 5, 2011 at 10:34 pm | Report abuse |
  6. DAVID

    if congress worked for a private company they would all be terminated with their last two weeks of pay in tow!!

    August 5, 2011 at 10:37 pm | Report abuse |
  7. DAVID


    August 5, 2011 at 10:38 pm | Report abuse |
  8. NadePaulKuciGravMcKi

    the Friday night bombshell
    serious as a heart attack

    Ronald Ernest Paul
    warned us in 2007

    August 5, 2011 at 10:40 pm | Report abuse |
  9. bj

    Mitt Romney just told a big lie. I thought he was a religious man. The Teabaggers are the fault. Remember Palin and Bachmann said not to raise the debt ceiling. Vote those Teabaggers out, recall them and stop talking about those two ladies that are absolutely clueness. As for Romney, he is not fit be president he is a LIAR!!!!!!!!!!! So are the Republicans!!!!!! Tell the truth CNN it is about having a Black President this is why they won't approve his appointments, they call hime horrible names and they disrespect. Tell the truth CNN or the 'little people' will start shouting it out. Tell the truth CNN!

    August 5, 2011 at 10:51 pm | Report abuse |
    • Teapartywasright

      Bj=big jerk, what does race have to do with anything?

      August 5, 2011 at 11:19 pm | Report abuse |
  10. DAVID

    tea party want to destroy America who needs alqaida....mitt romney has five sons and wouldnt send any one to go fight for America, and he sets up shadowy companies with his own money to donate to his campaign!!! the gop is toast in the eyes of America and the world...DONE!!!

    August 5, 2011 at 11:12 pm | Report abuse |
  11. celebs4truth.com

    Watch...it'll be all out bedlam, and 3rd world status, blood and guts in the streets, and the general media will still be calling this all a "double-dip recession!" HAHAHA Anyone who listens to the Alex Jones show has known this was coming for a looooong time! It's only establishment/mainstream media brainwashed idiots that still buy the "double dip recession" garbage that they've been feeding the sheeple for months and months that didn't know anything was coming, whatsoever!

    August 5, 2011 at 11:18 pm | Report abuse |
  12. Lee

    And the buck stops...where?

    August 5, 2011 at 11:20 pm | Report abuse |
  13. Ernest

    These are the same guys who rated all those credit default swaps triple A knowing they were junk so why do we listen to any of them anymore is beyond me. They are just as crooked and full of it as the govt.

    August 5, 2011 at 11:25 pm | Report abuse |
  14. Dar

    No matter what political party you are affiliated. It's a simple fact we shouldn't spend money we don't have. I just want to know who is responsible for spending $20 million dollars on the filtration system for the reflection pool in DC. That is SO ridiculous.

    August 5, 2011 at 11:36 pm | Report abuse |
  15. JW

    I wish people would stop blaming the tea party for this. If they did their own research and stopped listening to the mass media, they'd realize that the tea party is the whole group that really understands economics. Too bad they're so addicted to the mass media - otherwise, they might learn something! Go to Google, search for "tea party not enough cuts" - you'll realize the tea party is actually right on track. Granted, there will always be some extremists, and there will always be some nutcase tea partiers, democrats, republicans, etc - but at least stop listening to the mass media. Surprisingly, the tea party isn't as bad as it's made out to be.

    August 5, 2011 at 11:43 pm | Report abuse |
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28