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. Julianne Feldmar

    Consider the source. S&P who gave AAA ratings to junk mortgages. Didn't downgrade Enron, World Com and or Tyco until after everyone knew. Who would trust a source like this?

    August 5, 2011 at 8:46 pm | Report abuse |
    • GOP+TEA=POS

      thank you for posting rational thought. lets hope the rest of the country does not provide a knee jerk reaction to this report. wall st. is not known for their cool headed investment nature.

      August 5, 2011 at 8:50 pm | Report abuse |
  2. GV

    Thank you, Tea Party. Your kamikaze tactics have hurt every family in America. Extra monies paid in higher interest rates, not a penny of which goes to reduce the cost of government spending, and just fattens the wallets of the banks.
    The Tea Party is so on my Mikado list.

    August 5, 2011 at 8:46 pm | Report abuse |
  3. noteaparty4me

    Thank you GOP

    August 5, 2011 at 8:46 pm | Report abuse |
  4. jpzippo

    Way to go TEA Party, I hope the Republicans are happy when they go to get loans and the interest rate goes up! Bunch of jack@$$e$

    August 5, 2011 at 8:46 pm | Report abuse |
  5. Gene

    Tea party will destroy our democracy. And btw, Obama is over his head!

    August 5, 2011 at 8:46 pm | Report abuse |
  6. steveNYC

    CANT BLAME BUSH ANYMORE! OBAMA AND THE DEMS OWN THIS ECONOMY!

    August 5, 2011 at 8:46 pm | Report abuse |
    • bhpt

      Then why is your guy Boehner blowing about "getting 98% of what he wanted" in the debt-ceiling deal?
      No – YOU fools own this economy.

      August 5, 2011 at 8:48 pm | Report abuse |
    • GOP+TEA=POS

      please get your facts straight, GW Bush inherited a surplus from Clinton and then promptly flushed that surplus down the toilet. Obama inherited this cleveland steamer and is now faced with a new group of ignorant citizens>>>GOP+TEA+POS.

      August 5, 2011 at 8:57 pm | Report abuse |
  7. jacobs

    obama spent 2.6 trillion paying the interest on george bushes debt and deficits....clinton left him surpluses...gop thieves rot in hell!!!

    August 5, 2011 at 8:46 pm | Report abuse |
  8. Rick

    You put a Monkey in the Crack House and this is what you get !!!

    August 5, 2011 at 8:46 pm | Report abuse |
  9. Monique Manna

    Well, it could be worse...wait, we are headed there! Good grief...hey, maybe we should loan those Jet Flying Corporate CEO's some more money....Bring our troops home and stop spending the friggin $$$ on wars that SHOULD be over! For Chrisssst sakes! Saddam is DEAD and so is BIN LADEN! Stop giving yourself raises too! Hey Congress could you live off of the federal minimum wage of $7.25 per hour? And while we're at it....why the hell should we do anything with China? Bring our Corporations back to America where they belong! China treats their people like sh**, have total disregard for the quality of life and their standards aren't as high as ours when it comes to LEAD! Stop importing and lets start exporting! How the Frig did we end up in this GAWD AWEFUL MESS! Is this what our founding fathers wanted? TO the politicians...you are all on notice, shape up or you're out! You have 30 days! Oh wait, that's only in the real world!

    August 5, 2011 at 8:46 pm | Report abuse |
  10. o.guti

    How do people balme the Tea Party? Who's in charge here? Obama and Democrats. Republicans only control half of 1/3 of the government. 10,20, 30 yrs from now people will onlt remember who was in charge when it all crumbled: Obama. There's your Hope and Change crap

    August 5, 2011 at 8:46 pm | Report abuse |
    • Monique Manna

      it's years of abuse by everyone that has gotten us here...not the Tea Party...

      August 5, 2011 at 8:48 pm | Report abuse |
    • HawaiianDream

      Sure, people love to blame the Tea Party. How DARE they want smaller government, less spending and fiscal responsibility. Terrorists I say!

      August 5, 2011 at 8:51 pm | Report abuse |
  11. jplarabee

    why does everyone do a knee jerk reaction to what is always put in print

    August 5, 2011 at 8:46 pm | Report abuse |
  12. hansbronson

    Is it still Bush's fault or has Obama grown a set of gonads and taken responsibility for this mess yet.

    August 5, 2011 at 8:46 pm | Report abuse |
  13. Sean

    Thank you Grover, you should take full credit for this.

    August 5, 2011 at 8:46 pm | Report abuse |
    • HawaiianDream

      Don't blame Grover–it was O'Bummer the Cookie Monster!

      August 5, 2011 at 8:48 pm | Report abuse |
  14. gerbob8

    So, who really has the power in the world... these so-called agencies or the governments of the world?

    August 5, 2011 at 8:47 pm | Report abuse |
    • Vezalo

      We have the power. Why are we afraid to use it. People in Syria have been dying because of demonstration. All we have to worry about here in the US is bad jail food. Stand up America. This is our country. "We the people".

      August 5, 2011 at 8:53 pm | Report abuse |
  15. swc

    I think its funny how everyone blames Obama. The problem started long before he ever said he was going to run for President. Actualy It is all of our faults.

    August 5, 2011 at 8:47 pm | Report abuse |
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