As the U.S. credit risk looms and the potential for a downgrade of the nation’s debt remains a topic of discussion, some former Standard & Poor’s officials are looking back to 2011 for validation that their decision to downgrade the country’s credit rating was justified.
The S&P Global Ratings gave a triple-A rating to the United States since 1917, which was stripped by one notch in August 2011 after a policy standoff between Congress and the Obama administration over a looming debt ceiling cap. This slammed the financial markets and sent shockwaves around the world.
At the time, the Obama administration was heavily critical of the decision to downgrade the rating, arguing that the major credit rating firm had demonstrated a lack of understanding of the fiscal dynamics of the country.
However, some former S&P officials argue that their decision to downgrade the U.S.’s credit rating was justified. One former S&P director, Madhav Menon, said that the U.S. debt burden should have been viewed as a greater risk even then, as it continues to grow to this day without a clear solution in sight.