White House Sought to Stave Off S&P Downgrade

FOXBusiness

The Obama Administration tried and failed to persuade Standard & Poor’s analysts not to lower its debt outlook for the U.S., FOX News confirmed Wednesday.

In the weeks leading up to the rating agency’s warning issued Monday, administration officials tried to convince S&P that U.S. policy makers have a viable plan for reducing the nation’s massive debt load.

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It didn’t work.

On Monday, S&P issued a warning that unless the U.S. comes up with a plan by 2013 to scale back bloated budgets and reduce the debt – rapidly approaching $14.3 trillion – the influential rating agency will be forced to take away the coveted AAA rating for U.S. debt.

That would be an unprecedented move -- telling investors that U.S. debt is no longer the guaranteed safe haven its long been considered -- and one that would likely push interest rates higher and making borrowing more expensive for everyone.

A senior administration official told FOX News that the White House learned that S&P was considering the move and held a series of meetings with S&P analysts to discuss it.

The Washington Post had reported earlier that Treasury Department officials met with S&P to argue that S&P “was underestimating the ability of politicians in Washington” to hammer out a compromise plan for cutting spending and reducing the deficit. And besides, the officials reportedly argued, U.S. debt isn’t unmanageable.

Unconvinced by these arguments, S&P told the administration on Friday that an outlook downgrade and warning were imminent.

In its report, S&P pointedly noted: “We believe there is a material risk that U.S. policy makers might not reach an agreement on how to address medium and long-term budgetary challenges by 2013.”

S&P didn’t immediately respond to a request for comment.

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