America's pristine Standard & Poor's credit rating has taken a hit for the first time.
Standard & Poor's announced Friday night that it has downgraded the United States credit rating for the first time, dealing a huge symbolic blow to the world's economic superpower in what was a sharply worded critique of the American political system.
Lowering the nation's rating one-notch below AAA, the credit rating company said "political brinkmanship" in the debate over the debt had made the U.S. government's ability to manage its finances "less stable, less effective and less predictable." It said the bi-partisan agreement reached this week to find $2.1 trillion in budget savings "fell short" of what was necessary to tame the nation’s debt over time and predicted that leaders would have no luck achieving more savings later on.
The decision came after a day of furious back-and-forth between the Obama administration and S&P. Government officials fought back hard, arguing that S&P made a flawed analysis of the potential for political agreement and had mathematical errors in its initial analysis, which was submitted to the Treasury earlier in the day. The analysis overstated the U.S. deficit over 10 years by $2 trillion.
"A judgment flawed by a $2 trillion error speaks for itself," a Treasury spokesperson said Friday.
The downgrade will push the global financial markets into unchartered territory after a volatile week fueled by concerns over the European debt crisis and the slowdown in the U.S. economy.
Read more at the Washington Post.
That little game of chicken that Congress was playing over the debt ceiling seems to have backfired. Read the full text of the credit agency's withering assessment of the ability of our political system to straighten out the mess we're in at Forbes via Yahoo News.
In other news: Tuskegee Airmen Mark 70th Anniversary.
Sheryl Huggins Salomon is senior editor-at-large of The Root and a Brooklyn, N.Y.-based editorial consultant. Follow her on Twitter.