S&P Lowers United States' Long-Term Credit Rating
Originally published on Fri August 5, 2011 6:53 pm
Standard & Poor's announced that it had lowered the United States' long-term credit rating to double-A plus. The ratings agency cited political risks and a rising debt burden for their decision.
"The downgrade reflects our opinion that the fiscal consolidation 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," the agency said in a press release.
This is the first time in history that United States has had its credit rating lowered.
"More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011," the statement continues.
The agency also said it "pessimistic" that the debt deal reached between Democrats and Republicans would lead to a "broader fiscal consolidation plan." And that if the reduction in spending agreed to in the deal doesn't come to fruition, they would cut the rating further in the next two years.