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Summary The United States lost its triple-A debt rating for the first time in history.
The United States lost its triple-A debt rating from Standard & Poor’s for the first time in history, with the credit-rating agency saying the political system of the world’s top economy has become less stable and that budget cutting announced earlier this week didn’t go far enough.The Standard & Poor’s lowered its rating on the US by a notch to AA and, to compound the embarrassment, said the outlook is negative as well, as it threatened another reduction in two years. The rating agency said the deal reached by lawmakers to cut the federal deficit by an estimated $2.1 trillion over a decade didn’t go far enough, and “America’s governance and policymaking is becoming less stable, less effective, and less predictable than what we previously believed.” Read text of downgrade.The S&P, a unit of McGraw-Hill, had said in July that $4 trillion in cuts over a decade would be required if the US were to keep its triple-A rating. The US has over $14 trillion in debt, and, even after the deal reached this week, is anticipated to add another $7 trillion over the next decade. Read more on debt-ceiling deal.By S&P’s analysis, the US debt-to-GDP ratio will hit 85% by 2021. The move caps a wild day for markets and S&P itself. Multiple press reports indicated S&P had delayed downgrading US debt after the White House — which had received a draft — spotted errors estimated to be worth $2 trillion.
