Congress to blame as US cut to AA+
Saturday 6 August 2011 - by Will Henley
The United States has been shorn of its coveted triple-A sovereign credit status by leading rating agency Standard & Poor's for the first time ever.
The cut sets S&P's apart from both Fitch and Moody's, which opted to affirm the country's AAA score earlier this week.
In its statement, Standard & Poor's said: "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 stabilise the government's medium-term debt dynamics.
In a damning indictment of the horse-trading that has gone on between Republicans and Democrats in recent weeks, it said it is less convinced about the "stability and predictability" of the political system to solve its fiscal problems than when it first assigned it a negative outlook in April.
S&P's accuses political leaders of using the debt ceiling and threat of default as "political bargaining chips" and warned that without deeper cuts or new revenues, through tax rises and the expiry of Bush-era tax cuts, the chances of a return to triple-A is reduced.
"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," it said.
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