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S&P Lowers U.S. Credit Rating

WASHINGTON, Aug. 5 (UPI) — The bond rating agency Standard & Poor’s Friday downgraded U.S. debt from its current triple-A rate to AA+, a move an administration official called “amateur.”

Citing government officials it did not identify, ABC had reported earlier Friday the administration was preparing for such a move.

S&P said the downgrade reflects its opinion that the debt reduction plan Congress enacted “falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.”

“The effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges,” S&P said in announcing its decision.

One federal official told ABC News the downgrade would be based in part on confusion associated with the way Congress handled legislation to raise the limit on federal borrowing and a lack of confidence that further deficit reduction can be achieved under the current U.S. political system.

Citing another source it did not identify, ABC said another reason for the move was be the Republicans’ refusal to allow a deficit reduction deal to include new revenues.

However, another government official said the White House had told S&P the company’s thinking was “based on flawed math and assumptions.” And S&P acknowledged “its numbers are wrong.”

An administration official told NBC News after the credit rating was lowered, “It’s amateur hour at S&P.”

Treasury Department officials said the S&P announcement came after Treasury pointed out the rating agency, in a draft of its downgrade announcement, overstated U.S. debt by incorrectly adding $2 trillion to its projection of the debt, The New York Times reported.

The effect of the downgrade was a matter of speculation Friday but the Times noted that a small increase in interest rates on borrowed funds could add tens of billions of dollars to the nation’s annual debt repayment.

There is also a possibility that a downgrade of federal debt could lead to downgrades of other government-backed instruments, possibly leading to higher mortgage interest rates.

Rep. Barney Frank, D-Mass.,, the ranking member on the House Financial Services Committee, said on MSNBC the decision was “just a political judgment by a group of incompetents.”

“This is the rating agency that took money from people who were selling junk bonds and told other people to buy it,” Frank said, accusing S&P of overvaluing private debt while consistently undervaluing public debt.”

“They are as responsible for the financial crisis as anybody else,” he said. “There is zero chance of (the United States) defaulting.”

Moody’s Investor Services and Fitch Ratings both said Tuesday they will keep the country’s credit rating at triple-A for now, but they said a downgrade is still possible if the U.S. financial situation deteriorates or if promised federal spending cuts don’t materialize.

The two credit ratings firms issued their assessments after President Barack Obama signed into law compromise legislation passed by Congress to raise the nation’s debt limit and cut its budget deficit.

UPI - United Press International, Inc.

Since 1907, United Press International (UPI) has been a leading provider of critical information to media outlets, businesses, governments and researchers worldwide.

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  • Vic

    “However, another government official said the White House had told S&P the company’s thinking was “based on flawed math and assumptions.” And S&P acknowledged “its numbers are wrong.”

    An administration official told NBC News after the credit rating was lowered, “It’s amateur hour at S&P.”

    Oh well, ofcourse the only ones who know math are in the administration and everyone who comes with the real assessment and does not support communist ravings is amateur.

    Unbelievable insolence!

    • Jana

      Time for Geitner to be fired. HA its time to fire all of our Congress and President and start all over.

  • simian pete

    Here it comes ! A downgrade to AA+ rating is just the beginning ! HA HA HA !!!

    • Jana

      Thanks President Obama for all of the HARM you have done to our counrty.

  • Earl, QUEENS, NY

    And we were also hearing on talk radio last night, just before the opening of Japan’s stock market, questions about its possible reaction to the lowering of the USA’s credit rating. Whether I speak to the Japanese, Chinese, Europeans, or just to Americans, all I can say is: “DON’T BLAME ME – I VOTE REPUBLICAN” ….. That should be our motto. It’s true that some RINOs and moderate GOP wimps have contributed to our debt problem. But unfortunately a large % of American voters believe in the tooth fairy, and that firing the republicans and replacing them with Democraps will mean better fiscal responsibility, less government, and a stronger economy. They’re oblivious to the fact that electing Democraps will only make these bad situations worse. These moronic voters need to see the full picture. E.g., remember that ALL Republican House members voted against the costly failed $800+ billion stimulus/porkulus bill 2 ½ years ago. All GOP Senators voted against porkulus except for Benedict Arnold Specter and the 2 RINO dingbats from Maine. But thanks to the foolish errors of voters in 2006 and 2008, the GOP was in the minority, thus there were not enough votes to stop porkulus. And REMEMBER – this porkulus is in the baseline for future budgets. If porkulus could be removed from all FY budgets, that alone would cut deficits in half.

    And of course our current deficits are not enough for BHO and his democraps. They want to spend more, and more, and more…..!! And BTW, we know that a majority of Americans want to see Obamacare repealed. However, if this majority had voted wisely on 11/4/2008, then there’d be no need to repeal Obamacare, because it never would’ve passed in the first place!! WHERE IS COMMON SENSE???? The 2006 and 2008 elections clearly have had negative consequences. VOTE WISELY IN 2012 AND BEYOND!!

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