By Binyamin Appelbaum and Eric Dash, New York Times / http://www.mercurynews.com / Updated: 08/05/2011 09:07:30 PM PDT.
Saturday, August 6, 2011
US DEBT CRISIS: Standard & Poor's downgrades U.S. debt rating to AA+!
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WASHINGTON -- Standard & Poor's removed the U.S. government from its list of risk-free borrowers Friday night, citing concern about the rising burden of the federal debt.
The nation's rating was reduced to AA-plus for its long-term debt, one notch below the top rating of triple-A.
S&P, one of the three major agencies that assign grades to the credit of companies and governments, had threatened the downgrade if the government did not act to reduce the federal debt by at least $4 trillion over the next decade. This week, Congress instead passed a plan to reduce the debt by at least $2.1 trillion.
Treasury Department officials said that the S&P announcement was delayed after the Treasury found a serious mathematical error in a draft of the downgrade announcement, which was provided to the government Friday afternoon. The officials said that S&P inadvertently added $2 trillion to its projection of the federal debt, significantly overstating the problem confronting the government.
The other rating agencies, Moody's and Fitch, have said they have no plan to downgrade the country's credit rating, giving the government more time to make progress on debt reduction. The split verdict limits the impact of the S&P downgrade, as many consequences would be set off only by a reduction by two agencies.
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