The Ministry of Finance of hit back against the Standard and poor's downgrade of historic u.s. AA + from the finest AAA by tethering the credibility and judgment.
In a blog post on Saturday, the Ministry of Finance website, titled "just the facts: S and P to 2 trillion dollars," John bellows, acting Assistant Treasury Secretary for economic policy, said S and P "presented a decision regarding the creditworthiness of the USA based on a mistake of 2 trillion dollars."
Draggable says error raises "fundamental questions about the credibility and integrity of the S and P ratings action."
Counterterrorism Adviser Gene Sperling adds: "the size of the error in combination with willingness to simply change their mind on the spot of lead with the press release said the error was just phenomenal."
The "error" is largely a difference of opinion about what growth rate to use to calculate how quickly discretionary public spending programmes will increase over the next decade, either the expected Gdp growth or inflation rates.
S and P's GDP growth estimates are 5%, i.e., spending will increase 5% annually in the next ten years or 1.8 trillion dollars.
But Treasury says using the lowest rate of inflation results in lower expenditure forecasts. The rates of use here come from the bipartisan Congressional Budget Office. Treasury support here is the fact that the US GDP growth is now weighing approximately 2% for 2011.
S and P says soft approach caused to "dramatically overstates projected deficits — more than 2 trillion over 10 years."
Noting that the Treasury had to S and P this "basic mathematical mistake important effect", later saying "even chose the S and P to continue with their judgement is flawed by simply changing the main rationale for their decision rating by a single economic policy." Rich Edson, FOX business, Washington correspondent, who have received the cash position and has extraordinary news, DC's reaction to the downgrade.
After the integration of the error, S and P statement said that regardless of this, the downgrade is based on the creditworthiness of the US debt during a period of three to five years, that the Fund's outlook for the public debt is based on a period of 10 years.
S and P in a statement released early Saturday morning told the math error 2 trillion does not alter the decision to downgrade. S and P says, had consulted officials of sovereign ratings in Europe before announcing the downgrade after the market close.
Says by 2015 U.S. debt reaches unfounded 79% of GDP — and says using Treasury's approach makes a nominal difference only two percentage points by 2015, with a debt to GDP ratio 81%, or 345 billion dollars. S and P also requires at least 4 trillion dollars in deficit reduction over the next decade, saying in a statement the downgrade must be the 4 trillion flown through spending cuts or revenue increases.
S and P downgrade is likely to affect the cost of borrowing for the Government, businesses and consumers, making them potentially more than 0,7% or more, at a time when the u.s. economy ground to halt in the first half, with average annual economic growth decline below 2% for 2011.
10-year US Treasuries fell below 3% of the negotiated settlement of 2.6% in manufacturing, as investors fled the turmoil in Europe, which means a question mark hangs over how borrowing costs could rise due to the downgrade.
S and P also kept US debt on negative credit outlook, and "intense" fighting in Washington has created "a political impasse," thwarting concept deficit reductions. Moody's investors service and Fitch Ratings affirmed its AAA rating for u.s. 2 August, the day President Barack Obama signed the increase in debt ceiling law, avoiding default.
Math error, along with the S and P's decision to include u.s. State and local debt in its decision to downgrade, where State and local governments can cut or taxing way to financial health, are part of the controversial history back to S and P on a historic gesture.
Bellows of the Ministry of finance attacks S and P's reliability, by first creating the fact that that S and P consider a 2 trillion swing.
Says the "deterioration of the US decision was based partly on the fact that the budget control Act, which would reduce the deficit projected by more than 2 trillion dollars over the next 10 years, decreased by 4 trillion expectation for deficit reduction."
Draggable added: "Clearly, in this context, S and P sees a change 2 trillion projected deficits will be very important."