Update: The Wall Street Journal's Damien Paletta has more on the math fight going on between the White House and S&P:
S&P officials notified the Treasury Department early Friday afternoon it was planning to downgrade the debt, a government official said, and the firm presented its report to the White House. S&P has previously warned such a downgrade might come if Washington didn't move to comprehensively tackle its long-term fiscal woes.
After two hours of analysis, Treasury officials discovered that S&P officials had miscalculated future deficit projections by close to $2 trillion. It immediately notified the company of the mistakes.
S&P officials later called administration officials back to say they agreed about the mistakes, though they didn't say whether it would affect the rating. White House officials remained waiting Friday evening to see what the company would do.
Update: CNBC, via Twitter, reports that the White House pointed out an error in the S&P's computations and that the rating agency has acknowledged the error. In their truncated Twitter-ese, they say the nation's credit rating is hanging by a spreadsheet: "S&P Either Revising Rational Or Deciding Against Downgrade."
Update: CNN's John King spoke with an Obama administration source who said S&P notified the administration on Friday afternoon that a downgrade of the U.S.'s AAA credit rating is coming, but that the agency is now reconsidering after the White House argued that its economic models were flawed. According to a posting by Vaughn Sterling, a producer on CNN's Situation Room, King adds: "The official described the talks as a “moving target” and said “it’s clear some people there still want to go forward” and downgrade the US rating."
Update: More confirmation a downgrade is coming: CNBC's Kate Kelly is also reporting that government officials expect a downgrade. Citing "someone familiar with the matter," she reports that official expect S&P to issue a downgrade "as early as this evening or take other possible action."
Original post: The federal government expects S&P to downgrade the U.S. credit rating from it's current stellar AAA, ABC News's Jake Tapper reports. "Officials reasons given will be the political confusion surrounding the process of raising the debt ceiling, and lack of confidence that the political system will be able to agree to more deficit reduction," Tapper writes, adding, "A source says Republicans saying that they refuse to accept any tax increases as part of a larger deal will be part of the reason cited." Tapper's source was unsure of whether the downgrade would be to AA or the slightly better AA+.
S&P defines an AAA credit rating as "Extremely strong capacity to meet financial commitments. Highest Rating." The AA rating is merely a "Very strong capacity to meet financial commitments."
Whispers that S&P would downgrade Friday have been circulating on financial blogs. Joe Weisenthal
at Business Insider says there's been "crazy chatter" about the rating. MSN Money's Kim Peterson
reports that despite the rumors, many believed S&P wouldn't downgrade since rival ratings agencies Moody's and Fitch said they wouldn't. A downgrade would mean higher interest rates--not to mention a blow to America's self-esteem, she writes.
's Steve Schaefer
dismissed the rumor, saying flatly, "this isn't going to happen." Why not? Because S&P wouldn't want to stand alone in deciding to downgrade. It would "catch hell for going out on a limb on its own." A financial analyst said the rumor sounded like one that'd been started by "someone who wants the market to go down even further." Another also said S&P would stay "politically sensitive" and not downgrade.
This article is from the archive of our partner The Wire.