John Chambers, head of Standard and Poor's sovereign ratings committee (File photo)
Source: Press TV
Standards & Poor's has defended its decision to downgrade the rating of the United States saying the world's leading economy could even face further downgrades.
The S&P credit rating agency downgraded US rating by one notch to AA+ and added a negative outlook for the first time in the history of the ratings on Friday.
The ratings agency offered a full-throated defense of its decision on Saturday, calling the harsh stand-off between President Obama and Congress over raising the debt ceiling a “debacle.”
“The debacle over the debt ceiling continued until almost the midnight hour,” said John B. Chambers, chairman of S&P's in a conference call with reporters.
“For those who follow the fiscal situation of the United States, this shouldn't be news to anyone,” Chambers added.
Last week, US President Barack Obama voted in favor of a bipartisan plan to raise the country's debt ceiling in exchange for the spending cuts, just hours before a government default.
According to the new bill, the debt ceiling will be raised by USD 2.4 trillion, to reach a total of USD 16.7 trillion. The bill also includes a USD 2.1 trillion in spending cuts over the next decade.
This comes while the S&P believed USD 4 trillion was required in spending cuts over 10 years to retrain the US top notch rating, a proposal which was refused by the Republicans.
Chambers insisted that the ratings firm has not violated its bounds by focusing on the political paralysis in the US congress as much as fiscal policy in determining the new rating.
China, the largest foreign holder of the US debt, said that Washington needed to “cure its addiction to debts.” In addition Chinese leading rating agency Dagong also downgraded America's credit rating from A+ to A.
Despite the S&P decision, US congressional leaders' reaction showed that they were unlikely to force consensus on the fundamental divide over spending as they used the decision to bolster their own positions.