S&P Officials Blame Downgrade On 'Degree Of Uncertainty' In Politics
WASHINGTON -- Ratings agency Standard and Poor's defended its decision to downgrade the United States credit rating, arguing on Sunday that the downgrade was justified by the brinkmanship and lack of certainty in Congress.
Standard and Poor's announced on Friday it was downgrading the United States from a AAA credit rating to AA+, the first time the government's credit rating has been downgraded. Another downgrade could occur if the United States does not begin to solve its debt problem, although it is not officially on watch, according to Standard and Poor's managing director John Chambers.
"If the fiscal position deteriorates further or the political gridlock remains entrenched, that could lead to [another] downgrade," Chambers said on ABC's "This Week."
David Beers, global head of sovereign ratings at Standard and Poor's, said on "Fox News Sunday" that the downgrade may not have "much of an impact" on global markets, and should not be pinned on either political party.
The agency was concerned with the "degree of uncertainty around the political policy process," Beers said. "The nature of the debate and the difficulty in framing a political consensus ... that was the key consideration."
Democrats have pushed back on the downgrade, pointing out that S&P overvalued sub-prime mortgages during the 2008 housing crisis. Sen. Bernie Sanders (I-Vt.) was critical of S&P and its decision to downgrade on Saturday, saying, "I find it interesting to see S&P so vigilant now in downgrading the U.S. credit rating. Where were they four years ago?"
The Obama administration argued the downgrade was partially due to what they called a $2 trillion "basic math error" in calculating future U.S. debt last week.
"The magnitude of their error combined with their willingness to simply change on the spot their lead rationale in their press release once the error was pointed out was breathtaking," White House economic adviser Gene Sperling said in a statement to USA Today.
But Beers defended the disputed $2 trillion, telling "Fox News Sunday" the figure for future debt reflects "highly technical assumptions" and arguing the administration's criticism was a "complete misrepresentation."
Despite the deal to raise the debt limit and cut government spending, "the underlying debt burden of the US is rising and will continue to rise over the next decade," he said.