getting back to aaa. we suppose that if it did -- >> do we need to see tax increases or taxes on the table -- >> could i finish? >> sure, go ahead. >> i'll respond to your question. there are two issues here. one is bridging the political divide, whether it's -- and whatever that looks like in terms of the mix of revenues and expenditures, that's where congress and the administration need to decide. but if we had more confidence than we do now that there was going to be a durable political consensus about the choices around fiscal policy, that would give us more confidence about the ability of the government to stabilize the debt burden over the medium term. if those two things happen, yeah, there's a chance sometime in the future the u.s. can go back to aaa. >> david, thanks for joining me. appreciate it. we'll continue to follow this story. david beers is the global head of standard & poor's. >>> when we come back, we're going to talk to ken rogoff, former chief economist for the imf and mohamed el-eria

is not aaa if the u.s. is double a loss than if you used to be a double a plus when you got to go down to double a because you're not on par with the treasury if you are somewhat rich left more risky to treasury you're still more risky because the treasury can tax everybody to pay its bills and if the treasury doesn't tax it prince at the base of the dollar benefits all bonds not just its own laws but you know it's also crazy about the rating system why is china the world's biggest creditor nation we owe china trillions how can they be rated double a minus and we're all and we're a double a plus and we're kind of trial i don't world is the world's biggest debtor a bigger risk than the world's biggest creditor yeah why do. it's kiters comments he says s. and p. is being irresponsible as an s. and p. being responsible like. saying it's big government this big you're responsible they're the ones that are racking up in bed and you know the a-bomb administration is all over s. and p. because they claim they got

it's paid aaa own paper no real investor invest in us government bonds thinking its aaa they are that we are the largest debtor nation in the history of the world missed i know you have to report something but this is what all new that's there is no bond investors what are they doing now where will they be going it would affect their their investments certainly bonds went up last week once what happened there in the great ok so they're still going to have what just keep their own investments ignore the united states is that what you say no may have many people still invest in the united states government bond market it's the largest bond market in the world many people will continue i mean double a trust is not the end of the world even single is not the end of the world many many people invest in single a bonds and trips away vons of the world then ratings. adventure us will default there's no question we will either inflate people back in worthless money we will in trade away we will change the rules we will put on exchange controls or been sure the us will depart that's why people

he said during the stalemate, we have aaa credit, we don't have a aaa political system. s&p is pointing to that and immediately you see the political fight start. i've gotten tweets in the last few minutes, first credit downgrade in u.s. history over barack obama, harry reid put out a statement saying this shows the need for balanced deficit reduction, which republicans resisted in the debt talks. this certainly isn't going to solve any of our political issues, it might, provide, though, some impetus if we need anymore and it can be effective as we get to the special committee. >> it is striking to see, as you say, such political -- such political language from the rating agency, almost giving us a political credit rating rather than a default credit rating. very little in here about whether or not people who lend the united states money are likely to be paid back. >> that is precisely the counter argument you hear from administration officials. first of all, u.s. treasury securities are the most transparent, best financial instruments in the world. investors every day m

he said during the stalemate, we have aaa credit, we don't have a aaa political system.&p is pointing to that and immediately you see the political fight start. i've gotten tweets in the last few minutes, first credit downgrade in u.s. history over barack obama, harry reid put out a statement saying this shows the need for balanced deficit reduction, which republicans resisted in the debt talks. this certainly isn't going to solve any of our political issues, it might, provide, though, some impetus if we need anymore and it can be effective as we get to the special committee. >> it is striking to see, as you say, such political -- such political language from the rating agency, almost giving us a political credit rating rather than a default credit rating. very little in here about whether or not people who lend the united states money are likely to be paid back. >> that is precisely the counter argument you hear from administration officials. first of all, u.s. treasury securities are the most transparent, best financial instruments in the world. investors every day mak

it's paid aaa on paper no real in first or invest in us government bonds thinking is aaa they are we are the largest debtor nation in the history of the world mr i know you have to report something but this is what all new that's there's no bond investors what are they doing now will they be going it would have their their investments and certainly hands went up last week. ok and so they're still going to have the right. to keep their own investments ignore the united states is that we say oh america many people were still in burst in the united states government bond market it's the largest bond market in the world many people can tell you i mean double a trust it's not the end of the world or even single day it's not the end of the are really many people invest in single a bargain trip somebody vines of the world waiting for. us will go pop is no question we will either inflate great people back in worthless money we will inflate it away we will change the rules we will put an exchange controls of ensure the u.s. will depart that's why people are moving away from the u.s. governmen

the longest took 18 years to get back to aaa. >> not very encouraging.ine credit ratesing for the united states. it raises lots of questions about how the country got here and about where the safest place for our money is right now. >> right. if you got any money left, wolf, after the last few years, right? let's bring back cnn's money's poppy harlow, election harris of cnnmoney.com. what could the u.s. have done differently to avoid this? >> that sounds so maddening about the whole conversation we've been having for the past year. all budget experts have wanted from the very start, this goes back three years now is a long-term plan. they knew the economy was weak. they said, go ahead, do short-term stimulus, do medicaid, unemployment insurance. do infrastructure products. just give us lon-term plan on social security and medicare and everyone would have been satisfied and we wouldn't be going through this right now. >> poppy, where are the safe havens, if there are safe havens, right now where people who are watching here in the united states, around th

stripped of its aaa rating on friday. u.s. stock futures are down.n alan greenspan said this is sadly just the beginning. on "meet the press" greenspan predicted u.s. stocks will continue to fall and our economy may see a downward spiral. >> what i think the s&p thing did was to hit a nerve that there's something basically bad going on and it's hit the self-esteem of the united states, the psyche, and it's having a much profounder effect than i conceived could happen. >> let's cut to the chase. how does this effect you? the downgrade shouldn't have a big effect on your cash, don't expect to earn more interest if you're in a normal interest bearing account. feeling skittish experts say consider keeping your money in fdic accounts. credit card rates could go up, same with car loorngs small business loans. the consensus is be cautious, don't freak out. >> you should put it in the stock market in a broad-based index. in a year, year and a half, this country is going to turn around, after it did after the abysmal decade of the 1970s, turned around in the

and this is exactly what wall street banks want you don't make much money trading aaa rated u.s. government debt most of the economy in america over fifty percent of the economy is tied to investment banking and wall street trading so they control the g.d.p. for them to continue to make money they need to look for new business new revenues turning america's aaa rating to junk will make them many many billions of dollars in fees it's just simple economics and simple business just follow the money of the folks on wall street the american public by the juggler and they going to keep squeezing until they end up putting another fifty or sixty million of people permanently into poverty and just destroy this economy what obama needs to do if you're working in the interest of the people would be to nationalize j.p. morgan and goldman sachs immediately fire these crooks and start all over again because you've got a predatory monopolist down there on wall street who is interested in wiping out the middle class for a quick buck and that is tyranny of the risk of america's possible self-impo

>> it's going to take a lot to get back to aaa because once you lose your aaa it doesn't bounce back in that way. but a key debate will be coming up regarding the extension of the 2011, 2003 tax cuts. because if you did let them lapse for the high-income earners, that can give you another $950 billion. i think the question there is, a, what we've already achieved with the trillion or if it was agreeable with a gift, that is being accounted for at the congressional committee that is looking to achieve. >> john, a couple other things real quickly. first, there's obviously at least a dispute being discussed between the treasury department and s&p about the calculation of debt to gdp and they are alleging that there was a several trillion dollar difference between what you guys came up with and what they asserted. we all know that there are real questions about the economic growth assumptions, the health care cost assumptions, revenue assumptions and the interest rate assumptions. can you enlighten us at all as to what the nature of the dispute is and whether or not there is any validity

is graded at below aaa. who has the aaa rating? their cost of capital will come down.standard for the world. think about investing in countries whose debt is being emerged. emerging markets. think about the mega cap markets who take advantage of the falling dollar and their money will be cheaper because our rate will stay the same and we set the standard. there are opportunities. so it is going to be choppy. don't do anything while your emotions, especially fear, are in place. think about shifting your money. people will want to invest in the u.s. in a weaker dollar. >> there is the old wall street adage original a day like tomorrow, don't just do something, stand there. then after that, figure out where you want to be. thank you. really nice to talk to you, especially for that little dose of optimism in there and calm. thanks so much. let's bring in my colleague, candy crowley, and richard quest. host of "quest means business." he's talking about a push to the back of the head of our policy makers to have consensus and move forward and get our fiscal house in order th

he said our problem isn't that our credit isn't aaa. but our political system isn't aaa.& poor's said yes, that's right, that's why we don't think you can solve your debt and deficit problems in the medium term. >> basically we have all that fighting, these weeks of drawing it out and all of the issues back and forth and the s&p just ends up not being pleased with our debt deal? >> exactly right. now, the s&p had set a target. they said if we don't decrease deficits over ten years by $4 trillion, they were going to downgrade. now, moody's and fitch, the other two major rating agencies didn't set that target. they've said our credit is still aaa. that's why the administration can still hope the consequences of this in actual economic terms for the interest rates that you and i pay on homes and cars is going to be quite limited. but symbolically, still a blow. and the administration has taken an embarrassment here because it happened on their watch. republicans because they raised the stakes for a major deficit reduction deal and then blocked it by resisting the tax increas

of its aaa rating. citing what it called "political brinksmanship." the downgrade reflects our view and predictability of american policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges." it is sparking sharp criticism. what the obama administration says is mistakes in their calculations. some of the other criticisms say the agency's less than stellar record during the financial crisis should be put in perspective. >> they made a $2 trillion math error and forgot to check their work so the rating agencies that didn't make a $2 trillion math error reaffirmed the aaa status. >> i think s&p has shown really terrible judgment and handled it so poorly and shown a stunning lack of knowledge about basic u.s. math and drew the wrong conclusion. >> standard & poor's would have forfeited its good reputation if it had a good reputation to begin with. if you read what they actually said it's a kind of half-baked political analysis, criticizing the american system of government and how it works now. they're entitl

back up to aaa status? >> well, first of ail, that's happened and it's going to take a committee to see that the debt to gdp is on an onward slope and there is track record behind it and confidence that policy makers across the political spectrum can come together to put the country first. >> did i hear you say it could take nine years for the u.s. to go back to aaa status? >> well, i'm just giving you five historical precedence. >> do you want to see more spending cuts as far as the u.s. is concerned a balanced approach, spending cuts, and increased tax revenues? >> what we said is that we won't take a position of whether the mix should be on the spending side or on the tax side. we have said that it's important to have bipartisan support and whatever agreement you have, you have to have confidence that it sticks. you had the greenspan position, a bipartisan agreement but once it was reached, no one ever talked about undoing it. because it had broad bipartisan support. >> would it be important or not that

aaa financial status. i kept think, if all and us can just try to have aaa personal finances. what's it take? >> i know, everybody's focusing on the country now, the aaa status, and we forget, how would we rank? would we get aaa status? unfortunately for a lot of consumers, not the case. there's a lot of things we need to think about to get our personal finances in the right financial mode. >> retirement plan is pretty important, that's the very long-term, and that's where you could be taking advantage of lower stock prices now, investing in stocks. when creating a retirement plan, you say there's three main factors or issues. >> the biggest factor is know what your income is going to be, obviously from social security, pensions, maybe part-time job, and investment income. and what's really important to know is, guess what, your investment income that you thought maybe you would be expecting ten years ago, many people expect an 8% return. guess what, now you should be looking at maybe a 6% return, even a 5% return. we know the type of life we are living in. >> and be really br

is still aaa, if you own $40 billion in bonds you might say that. >> we kept the aaa rating but said,'re sketchy. >> fitch the third one. they have not followed them. at this point it's kind of a bad -- this proved bad for s&p brands. they have politicians of all sides attacking them. they're fighting back. i think for moody's and fitch, they are happy to sit on the sidelines and see all of these air res flung at their competitive. >> now the onus is on us, the u.s., to retain that aaa rating? get it back. >> two things. obama gave the speech about the need to compromise talking about process. we need declarative statements from s&p. what does it take to get that rating back? what number are we talking about divided between taxes and cuts by what date? president obama should come out and say, talked about i'm going to talk with my advisers. form this committee. they know what you can do to bring the deficit over control in ten year. come out way plan tomorrow. congressional republicans, passeded ryan budget. didn't go anywhere. they should declare, is this our plan for long-term goeth

i think we are aaa. if there is any way to be a quadruple a, we will be. >> how can you be quadruple a when you've got 15 trillion dollars worth of debt? >> credit rating agencies are supposed to rate your ability to pay the interest on the debt you have. we have around 29 billion dollar interest payment, per month. we take in as a country 175 to 200 billion dollars, per month. which means we will always be able to pay the debt down. >> we've just announced we are going to increase the debt by for self trend trillion and interest rates -- seven trillion >> i'm saying our ability to pay our debt is sound and in intact. we have to get our debt down p no doubt. head of the s&p who i spoke to today said off camera, granted but he did say if we had some sort of balanced budget amendment to the contusion where were weren't adding to the debt we wouldn't have been downgraded this isn't a partisan statement. this is the s&p trying to flex a little muscle. >> s&p has all kinds of problems not just the mortgage me

to lose its aaa rating even to an aa plus, that it is an embarrassment.t can be a push to the super congress that is going to be looking at how to bring down the deficit by another 1.5 trillion. so i think it can serve as both, believe it or not. but in the time between now and that committee gets working, it will be used as a political bludgeon. >> let's talk a little about europe. that is something that joe durant talked about. it doesn't take very long themselves look at futures. they look at what happens happening in asian markets but they stay debt crisis in europe. this is another very big issue. almost as big as the downgrade. it is getting all the headlines in the u.s. >> no. no, no, no. no, no, no, no, no. no, no. i've got to take issue with you here. >> please do. >> the european debt crisis is a bigger issue than the u.s. debt downgrade. it was expected. it is not going to have a noticeable effect. it is a constant that has become a variable. and it is certainly an absolute that has been changed. but actually business as usual tomorrow. what yo

credit rating has just been downgraded from aaa to aa+. standard & poor's downgraded the united states' credit rating for the first time ever, tonight. despite last week's deal. the deal will affect many americans because it would raise the rates of credit cards, mortgages and car loans. joining us is white house correspondent ed henry. stunning news. >> reporter: it is. in some ways we knew this could be coming. we find out that debt deal hailed by both sides was not good enough there was only a trillion cut upfront. basically standard & poor's is saying, like many other people around the country and around the world, are they going to follow through? bottom line for the president this is a stain on his presidency. this is the first u.s. president to have u.s. debt downgraded on his watch. frankly that is why the administration spent all afternoon and evening fighting this behind the scenes. to try to prevent s&p from doing this treasury department got a call this afternoon saying this was going to happen. i'm told officials started going

loans that were aaa they said a.i.g. was aaa and until the day it went bankrupt they said fannie mae and freddie mac. were trying to be aaa until they went bankrupt please these people have never been right why do you pay attention to i don't know any investors any real investors who pay any attention to these people anymore what effect will have an asian economy no known whatsoever all the asians already know that america's got problems all of us are already moving out of u.s. government bonds everybody in asia knows that all of this is away from the aaa rating but let's go to this is the plan that we've been seeing have recently this has been the sharpest since two thousand and eight and it does we have bring back memories of the lead up to the international crash in two thousand and eighteen you think there's going to be a second global recession oh absolutely we never got out of the first global recession unemployment in america is still higher than it was in two thousand and eight but american debt is skyrocketing g

from a aaa to a aa plus rating.uld mean higher interest rates on loans, insurance, you name it. s&p blamed congress and the obama administration for the downgrade. the announcement came days after a much criticized deal to raise the debt ceiling. a texas injury heard testimony that warren jeffs raped his then 5-year-old nephew more than a decade ago. prosecutors call the brent to the stand as part of the penalty phase. his uncle removed him from sunday school to sexual assault of a minor. he faces possible life in prison. although prosecutors say there could be several days before the penalty phase is over. >>> after 40 years, the fbi is still looking for d.b. cooper. he's a sky jacker who got away with cash and jumped out of a plane and was never seen since. the fbi is working on a fresh trip. the infamous cooper may be a man named as lynn

as a aaa. while we're not going to see it go right back to aaa with s&p, so far these other two ratings agencies haven't followed suit. >> all right. the american people are going to have a very interesting thing to watch here as this plays out, especially gearing into election season. athrena jones, thank you so muc from washington. >>> well, not surprisingly, reaction from the downgrade from republican presidential candidates, it's been fast and furious. mitt romney released a statement saying "america's creditworthiness just became the latest casualty in president obama's failed record of leadership on the economy. standard & poor's rating downgrade is a deeply troubling indicator of our country's decline under president obama." that from mitt romney. the reaction from michele bachmann, also a presidential contender, "i call on the president to seek the immediate resignation of treasury secretary timothy geithner and to submit a plan with a list of cuts to balance the budget this year, turn

from aaa to aa+. it's a first for the country and an embarrassment for president obama. in explaining the decision, s&p says the nation's growing debt, coupled with last week's political bitterness over raising the debt ceiling, gives them less faith in the nation's ability to repay its loans. it comes days after congress cut the debt ceiling deal shaving more than $2 trillion over the next decade. in essence, s&p thinks the deal fell short. after standard & poor's notifycration of the downgrade the obama administration fired back saying the s&p's own figures were off by $2 trillion. s&p did acknowledge the discrepancy but says its decision to downgrade remains. >>> hours off the downgrading, s&p's managing director john chambers spoke to anderson cooper about the rationale behind the downgrade. >> i think there were two reasons. the first reason is the one you got being our vushgs the political settings in the united states, have been altered, we've taken them down a notch, taken the rating down a no

& poor's on dismal prospects for the united states regaining its aaa credit rating.aded the u.s. to a aa plus rating for the first time in history. could you have to pay higher interest rates on things like credit cards and insurance. and that's just for starters. this is just days after the ugly protracted battle over raising the debt ceiling ended with a deal that seemed to make almost no one happy. s&p says political gridlock is the main reason it did this, pointing fingers at both the obama administration and congress. but the report specifically calls out the republicans in this section. it says compared with previous projections, our revised base case snos now assumes that the 2001 and 2003 tax cuts meaning the bush tax cuts due to expire by the end of 2012 remain in place. we have educated our assumption on this because a majority of the republicans in congress continue to resist any measure that would raise revenues, a position we believe congress reinforced by passing the act meaning the debt skiing deal. poppy harlow will talk about this now. poppy, who's l

what can washington do to help get this aaa credit rating back? >> reporter: this is one chapter in the story. we've got a long way to go. we've got a special committee appointed with the next two weeks to try to get another trillion and a half in deficit reduction and the continue can take more decisive action than they've taken so far, requiring a big deal. not just cuts in entitlements but tax increases republicans have been resisting. until they control the entire government they can't impose a long-term solution of that kind. so it's possible this will increase pressure for a compromise this fall. otherwise, you have the trigger that's going to impose deep spending cuts that's not going to make anybody happy. >> john harwood, more of your thoughts a bit later this morning. >>> joining me here in the studio, ron insana way good morning to tu, ron. >> good morning. >> as much as when i heard the news last night and i let out a no! you know, this really wasn't a surprise. >> well, it was and it wasn't. there were some speculation that the rating

are there other countries who still have aaa ratings? >> everyone from australia to denmark, germany, europe's strongest economy. isle of man. >> we're below isle of man? this place? that place has better credit than we do? there's no industry there? they just horse around in the pool all day. >> that's man island. >> great britain totally different story. bad stuff going on there. three days and nights of viles and not over yet. we'll go to london after the break and show you why this that you're looking on your screen is happening in london. here's the quote of the day. president obama show some guts and arrest the ceo of standard & poors. it's nine minutes after the hour. credit cards promise flights for 25,000 miles, but... [ man ] there's never any seats for 25,000 miles. frustrating, isn't it? but that won't happen with the capital one venture card. you can book any airline anytime. hey, i just said that. after all, isn't traveling hard enough? ow. [ male announcer ] to get the flights you want, sign up for a venture card at capita

is aaa, the financial system.ee how that unwinds and how there's kind of a new baseline for the way markets interact with each other. >> well, when you look at the united states as being so quote/unquote perfect we're no longer at that level anymore and when it comes to individuals, suddenly mortgages got more expensive, car loans got more expensive, education loans got more expensive. when it comes to the global recovery, we just took another step back. >> if anything it's costing you more in interest, money you're not paying somewhere else and spending it in the economy. >> absolutely. you can't meet those payments now. >> your mortgage doesn't go up today. i want to be clear about this. a lot of viewers have been asking us, if your mortgage doesn't change today because, in fact, interest rates could go down before they go up so if you have an adjustable rate mortgage or a chance to finance it could get better in the near term. over time, interest rates could rise, that can be a damper on the economy and that's

the country's top aaa rating will be lowered to aa+.the agency saying that it is making the move because the deficit reduction plan passed by congress tuesday didn't go far enough to stabilize the country's debt situation. a source familiar with the discussion says the obama administration believes s&p's analysis contained "deep and fundamental flaws. the downgrade comes despite last week's deal to increase the nation's credit limit. the deal will effect many americans because it could raise the rates of credit cards, mortgages and car loans. we go to chief white house correspondent ed henry can you tell us about this? what it means to the average consumer? >> reporter: it could have a dramatic impact on interest rates on the markets when they open monday obviously this is why it is such a big deal. no united states president has soon a downgrade like this on his watch. it -- has seen a gown grade like this on his watch. it has been downgraded fromó= aaa to aa+. we just got reaction from the obama administration. saying, a judgment flaw

who's left in the aaa club now the u.s. is out of it? >> you are right.e got booted out of the club 8:00 eastern time last night. it was 16 countries and now it is 15. we have have them we will pull them up on the screen for you. australia, canada, german ny, singapore, switzerland, the netherlands. you see them on the screen. even the isle of man, a tiny country off of the coast of the u.k. those are rated the pristine aaa credit the united states is no longer part of that club. however, i want to put it in perspective. a aa-plus is not that bad. it rates us higher than a lot of other countries, higher than japan, china, much higher than brazil and india. when you put it in perspective, our debt is valued higher than the debt of those countries. an interesting note here, china is the biggest holder of our debt and almost half of the debt of this country is held by foreign entities. that's why it is a global story. it is not just about the united states. >> there's a lot of concern nation how they came up with with this. a lot of folks in washington sayin

to aaa-plus. get back to wall street in a few moments. anderson cooper is joining us on the phone. anderson is reporting tonight and all this week from kenya and later in somalia. anderson, it's a horrendous situation, a human tragedy unfolding where you are right now, literally millions of people potentially on the verge of starvation. human crisis. set the scene for us. tell us what's going on. >> as you know, wolf, as you say, i mean, some 3.2 million people are at the risk of starvation. need life-saving intervention immediately. frankly, just because of the conflict in somalia because of this group which controls parts of southern somalia, aid workers haven't been able to get food to where they need it. a lot are fleeing the country, going to ethiopia and coming to kenya. what is the largest refugee camp built for 90,000 somali refugees 20 years ago, it's got more than 400,000 in the camp. under 65,000 on the outskirts of the camp waiting to get in. there's simply not enough money in the pipe

s aaa rating. the bigger question is the market come monday. is the stock market, particularly the bond market, remember and i will tell you, i don't think so. >> neil: you don't think what? >> yesterday, i -- last night i smelled this thing coming. how? because i knew that the -- >> neil: you don't think what is going to not happen? >> i don't think the bond market is going to implode. you smelled this coming because government officials, the issuers that get the press release, they were telling us that this might happen, right. when i'm doing that i'm calling the wall street firms. is this baked into the market? yes.=+j: >> neil: will we have to pony up more to get the chinese, japanese, germans, canadians to buy our debt? >> only if there is a better alternative. that's what the market will tell you. i don't think there is. where are you going to put your money? if you want a safe haven? are you going to put it in the finished treasury bond -- in the finnish treasury bond or the chinese treasury bond? >> neil: there are others that have not

being a aaa. if the u.s. loses that aaa status, it will be much more difficult for the u.s. to restore growth. >> reporter: why? first, interest rates will likely rise, making it more expensive for everyone. the u.s. government, private businesses and you to take loans. the value of the u.s. dollar could drop, making it more expensive to buy any imported goods. all of these scenarios combined could trigger another recession. while a downgrade would no doubt be a painful blow, there are those who argue that it would not be earth shattering. so far financial markets haven't panicked the way many predicted. interest rates remain flat even after the stern warnininof a downgrade. >> this is an abc news special report. countdown to crisis. >> good evening, i'm george stephanopoulos at abc news headquarters in washington. we're interrupting your regular program because president obama is about to announce that there's been a deal on this debt crisis that is the devil to washington, raised the prospect that america would default on its obligation for the first time in history. he's