Latest News:  
Beijing   Cloudy    34 / 24   City Forecast


Why S&P downgrades U.S. credit rating

By Ji Zhenyu, Yu Liang (Xinhua)

16:00, August 06, 2011

NEW YORK, Aug. 5 (Xinhua) -- The credit rating agency Standard & Poor's on Friday cut the United States' credit rating to AA+ from AAA, citing three fundamental reasons for the downgrade, the first ever in U.S. history.


According to S&P's judgment, the debt situation of the United States doesn't satisfy the requirement of an AAA rating.

S&P compared U.S. debt with the other four countries with AAA ratings: Canada, France, Germany and Britain.

It estimated the five countries will have net general government debt to GDP ratios this year ranging from 34 percent of Canada to 80 percent of Britain, with the U.S. debt burden at 74 percent.

S&P predicted the net public debt to GDP ratios will range between 30 percent of Canada and 83 percent of France, with the U.S. debt burden at 79 percent.

Although the U.S. ratio of net public debt to the GDP was not the highest among the five countries, the rating agency projected that the net public debt burden of the other four countries will begin to decline, either before or by 2015.


On Aug. 2, U.S. President Barack Obama signed legislation designed to reduce the fiscal deficit by 2.1 trillion U.S. dollars over 10 years.

However, according to S&P's calculations, a good "down payment" on fixing the country's finances would be at least 4 trillion dollars.

"The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics," S&P said.

The rating agency believed the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicated that further near-term progress containing the growth in public spending, especially on entitlement, or on reaching an agreement on raising revenues is less likely than previously assumed and will remain a contentious and fitful process.

【1】 【2】


Leave your comment0 comments

  1. Name


Selections for you

  1. Death toll rises to 24 from building collapse

  2. Typhoon Muifa sweeps over coast of Qingdao

  3. Hot-air balloon festival kicks off

  4. Rebecca Zhu wins top prize at Miss HK 2011

Most Popular


  1. U.S. selling weapons to Taiwan should be punished
  2. It's time for US to take responsibility
  3. Zhouqu's horrible disaster must be remembered
  4. The financial crisis comes back to bite us
  5. Why S&P downgrades U.S. credit rating
  6. Rumors of bankruptcy wave groundless
  7. Japan's aircraft carrier jitters unfounded
  8. Political negotiations needed to end Libya deadlock
  9. Use Weibo as a guide, not a master
  10. US: A crisis of debt and of democracy

What's happening in China

Shandong braces for typhoon

  1. China willing to facilitate military cooperation with Russia: senior military officer
  2. China's railways carry 1.095 bln passengers in first seven months
  3. Unauthorized sellers of Apple products in Zhongguancun face logo ban

China Features

  1. When will the horses run?
  2. Marriage knots unraveling
  3. The spread of Tibetan culture
  4. Blood stains the Silk Road
  5. Whither this speed?

PD Online Data

  1. The Uygur ethnic minority
  2. The Kazak ethnic minority
  3. The Hui ethnic minority
  4. Mongolian ethnic minority
  5. The Tibetan ethnic minority