New Report: Government Prepares For S&P Downgrade

Elisabeth Meinecke
Posted: Aug 05, 2011 4:59 PM

Is this what we went through all the drama of last week for? Twenty-four hours after your president partied with celebrities, Jake Tapper of ABC News is reporting that a government official told ABC News the federal government is "expecting" and "preparing" for a downgrade by S&P:

"A government official tells ABC News that the federal government is expecting and preparing for bond rating agency Standard & Poor’s to downgrade the rating of US debt from its current AAA value.

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. 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."

There were rumors of a downgrade earlier today, but unsubstantiated. Tapper's report puts a more substantial layer to the story, however, with the government sourcing.