US stripped of AAA credit rating by S&P as agency blames political weakness
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 to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.
White House officials then claimed to have discovered a $2tn-sized hole in S&P's calculations, and briefed journalists. But it failed to wring a delay out of the agency, which went ahead with the downgrade.
Earlier this week, the other two major credit rating agencies, Fitch and Moody's, reaffirmed their versions of AAA ratings after the end of the debt ceiling fight. But Fitch also said it was keeping its US rating under review until the end of August.
SIFMA, a US financial industry trade group, estimates that the downgrade could add up to 0.7 of a percentage point to the yield (interest rate) of US government bonds, increasing the cost of servicing public debt by $100bn.
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