The agency lowered the rating of the United States by one notch to AA +. S & P said on Friday night that made this decision because the deficit reduction plan passed by Congress on Tuesday, do not go far enough to stabilize the country’s debt.
According to a source familiar with the matter, the Obama administration believes that the analysis of S & P contains “deep and fundamental flaws.”
S & P said that in addition to lowering the rating of the United States, it issued a negative outlook, meaning that there is a risk that the rating to be lowered again over the next two years. The agency said the U.S. could get the AA if the cuts are less important than what Congress and the administration are committed to do, if interest rates increase or new tax burdens are exercised during this period.
In April, S & P warned that the U.S. government lowered the rating of the United States was possible if Congress and the administration could not agree on a long term plan to reduce spending and avoid a default.
After months of haggling and negotiations with the administration, Congress finally passed at the last minute this week a plan to reduce the debt that has prevented a default.
In his statement, S & P says he changed his opinion on “the difficulty of bridging the gap between the political parties” about a credible plan for deficit reduction.
The agency now says “pessimistic” about the ability of Congress and Administration to take advantage of their agreement to achieve fiscal consolidation plan that would stabilize the broader dynamics of government debt.