US calls S&P; downgrade ‘a facts-be-damned decision’

August 6th, 2011 - 8:21 pm ICT by IANS  

Washington, Aug 6 (IANS) As Standard & Poor’s move to downgrade the credit rating of the US sent shock waves through America, Obama administration officials called it “a facts-be-damned decision,” saying S&P; admitted to an error that inflated US deficits by $2 trillion.

US Treasury officials received S&P;’s analysis Friday afternoon and alerted the agency to the error, CNN cited an unnamed senior administration official as saying.

The agency acknowledged the mistake, but said it was sticking with its decision to lower the US rating from a top score of AAA to AA+.

“This is a facts-be-damned decision,” the official was quoted as saying. “Their analysis was way off, but they wouldn’t budge.” The White House is now in wait-and-see mode — hoping the decision and the S&P; analysis face outside scrutiny, he added.

“A judgment flawed by a $2 trillion error speaks for itself,” a Treasury Department spokesperson said.

John Chambers, head of sovereign ratings for S&P;, admitted there was an error in a CNN interview Friday night, saying “we agree with the Treasury’s position on this and our figures reflect that.”

But he also said the error “doesn’t make a material difference — it doesn’t change the fact that your debt-to-GDP ratio … will continue to rise over the next decade.”

S&P; has not spelled out what the US has to do to regain its AAA rating. However, Chambers said “it’s going to take a while to get back to AAA.”

Meanwhile, in the midst of the blame game, analysts said the downgrade of the US AAA credit rating will apply even greater pressure on Congress to follow through on plans to tame the nation’s debt.

In its downgrade announcement Friday, S&P; said it could “stabilise” the US rating if the work of a proposed new bipartisan 12-member “super committee” helps lead to debt-reduction measures “beyond the minimum mandated.”

(Arun Kumar can be contacted at arun.kumar@ians.in)

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