For the first time in history, credit rating agency Standard & Poor's has downgraded America's top notch credit rating, stripping the world's largest economy of its prized AAA status.
'We have lowered our long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA,'' S&P said Friday in a stunning blow to the country, that has enjoyed the top rating for 70 years, and its political leadership.
In July, S&P, one of the three major agencies that assign grades the credit of companies and governments, placed the US rating on 'CreditWatch with negative implications' as the debt ceiling debate devolved into partisan bickering.
To avoid a downgrade, S&P said the US needed to not only raise the debt ceiling, but also develop a 'credible' plan to reduce the federal debt by at least $4 trillion over the next decade.
Earlier this week, Congress instead passed a plan to reduce the debt by at least $2.1 trillion.
In its report Friday, S&P ruled that the US fell short: 'The downgrade reflects our opinion that the ... plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilise the government's medium-term debt dynamics.'
