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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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Such good news for the country, hope people have their loans and such paid off, cause bet fitch and moddy will rethink it to come monday.
Thanks TP and Reps. and Grover. I hope you guys are happy. This first time, not so happy, historic event is all ON you. Just try spinning it on the Dems
obama signed it...
S&P fraudlently graded subprime mortgage backed securities as AAA under pressure from investment banks so they could be sold as top grade investments only to have them collapse. S&P is directly responsible for the 2008 Wall Street meltdown. They shouldn't even be allowed to exist, much less pass any kind of judgement on anybody. Hey S&P...F-U and your A-A rating!
This should come as no surprise. The downgrade was earned.
Time for a recall. Get those tea party morons OUT of the House of Representatives. This is entirely their doing.
They represent 1/9 of 1/3 of the problem. Care to expand horizons?
these are the same idiots that gave A+ ratings to the mortgage backed securities that got us into this economic mess in the first place....... and now they down grade the U.S. debt to make matters even worse. That's just great!!!
I'm with you John this is a a joke coming from them.
YOU CAN THANK THE REPUBLICAN/TEABAGGERS WHO REFUSE TO RAISE REVENUES. GOOD JOB REPUBLICAN/TEABAGGERS FOR SOCKING IT TO THE INVESTOR CLASS, THE MIDDLE CLASS AND THE AVERAGE AMERICAN.
You can't keep raising an imaginary debt ceiling and think rating agencies will be fine with it.
That HOPE & CHANGE working out for you losers?
don't worry, after next election we WILL find out who voted for Barry .. and you will be held accountable.
Not quite, S&P said it would take 4 trillion in cuts to avoid the downgrade, and President Obama offered up 3 trillion in cuts and 1 trillion in revenue, the House teatards rejected it, the down grade is owned by the GOP tea bagger "freshmen".
Oh no! It's the end of the world! Duck and cover!
So now we ALL get to pay higher interest rates so that those big banks get to make MORE money. American Dream dead unless your a billionaire.
mmmmm arnt we glad we elected all of these bozo's.
I hope that the Republicans and their fellow-traveling Tea Party are happy with what they've caused.
You voted for CHANGE and CHANGE is what you got. I know, I know, its still Bush's fault and the current president needs 8 years to fix it. Morons.
The rethugilicans said they wanted president Obama would be a one term president. They are willing to destroy America to do it. Godd job rethugs and teabaggers.