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U.S. Loses AAA Credit Rating From Standard & Poor's

The U.S. Capitol building in Washington, D.C.

The U.S. Capitol building in Washington, D.C.

One of the top credit rating agencies, Standard & Poor's, has downgraded the United States' top-notch AAA rating for the first time ever.

S&P cut the long-term U.S. credit rating by one notch to AA-plus on concerns about growing budget deficits.

S&P said in a statement that the outlook on the new U.S. credit rating is negative, a sign that another downgrade is possible in the next 12 to 18 months.

John Chambers, chairman of S&P's sovereign ratings committee, told CNN that the U.S. could have averted a downgrade if it had resolved its congressional stalemate earlier.

The downgrade follows a bitter political battle in Congress over cutting spending and raising taxes to reduce the government's debt burden and allow its statutory borrowing limit to be raised.

On August 2, President Barack Obama signed legislation designed to reduce the fiscal deficit by $2.1 trillion over 10 years. But that was well short of the $4 trillion in savings S&P had called for as a good "down payment" on fixing America's finances.

Senate Democratic Majority Leader Harry Reid said "the action by S&P reaffirms the need for a balanced approach to deficit reduction that combines spending cuts with revenue-raising measures like closing taxpayer-funded giveaways to billionaires, oil companies, and corporate jet owners."

Republican House Speaker John Boehner called the decision by S&P "the latest consequence of the out-of-control spending that has taken place in Washington for decades."

However, the U.S. Treasury said there was a $2 trillion dollar error in the agency's calculations.

The other two major credit rating agencies, Moody's and Fitch, said they had no immediate plans to follow S&P in taking the U.S. off their lists of risk-free borrowers.

compiled from agency reports

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