U.S. government bashes AAA credit rating downgrade
Posted Aug 6, 2011 9:03 am.
This article is more than 5 years old.
TORONTO, Ont. – The Obama administration is questioning the math that led to the decision to downgrade the U.S. credit rating by credit agency Standard & Poor’s.
For the first time in history the U.S. government no longer has a sparkling AAA credit rating, at least according to Standard & Poor’s, which is one of the “big three” credit agencies.
The drop comes following the U.S. debt crisis and resulting bill to cut spending while increasing the debt ceiling. Although the American government did not actually default on their loans, the lack of agreement in Congress combined with what some call insufficient spending cuts likely led to the downgrade.
America’s largest creditor, China, also took the time to comment on the downgrade, blasting the U.S. for its “debt addiction.”
According to CNN’s John King, the downgrade happened even though the Obama administration noticed faulty data being used by S & P in their calculations.
“I’m told the treasury quickly caught what they call a $2-trillion mistake,” King said. “The administration says when they pointed that out, their analysts went back with S & P’s side, and they said you know what, you’re right, we’re going to change our numbers.”
“But then they refused to change their judgment or their announcement.”
In addition to the downgrade, S & P also issued a negative outlook, meaning there is a chance the rating could be lowered again within the next two years.
Global markets were hit hard last week over growing concern over both the American and European debt problems, as well as talks of a “double-dip” recession.
