S&P officials: Downgrade due to Obama's deficit woes
WASHINGTON -- Top officials of Standard & Poor's on Saturday defended their decision to downgrade the U.S. government's credit rating after the Obama administration called the move a hasty decision based on faulty math.
The administration had tried to head off the downgrade announced late Friday. It told S&P that the agency had made wrong calculations about the federal budget.
But S&P officials on Saturday insisted that they had come to a reasoned conclusion that the U.S. will have difficulty getting its soaring deficits under control. And they said S&P had given plenty of warnings that a downgrade could be coming if Congress and the Obama administration did not produce a credible deficit-cutting plan.
David Beers, global head of sovereign ratings at S&P, said the company was concerned that the deal on the budget reached last weekend fell short of what S&P felt was needed. S&P was looking for $4 trillion in budget cuts over 10 years. The plan that passed Congress on Tuesday after months of haggling would achieve $2.1 trillion to $2.4 trillion in cuts over that time.
Another S&P concern was that lawmakers and the administration might fail to make those cuts because Democrats and Republicans are divided over how to implement them. Republicans are refusing to raise taxes in any deficit-cutting deal while Democrats are fighting to protect giant entitlement programs such as Social Security and Medicare.
S&P so far is the only one of the three largest credit rating agencies to downgrade U.S. debt. Moody's and Fitch have both issued warnings of possible downgrades but for now have retained their AAA ratings.
Asked when the United States might regain its AAA credit rating, Beers said S&P would take a look at any budget agreements that achieve bigger deficit savings. But the history of other countries such as Canada and Australia, which saw cuts in their credit ratings, shows that it can take years to win back the higher ratings.