By Alexander Bolton - 08/07/11 05:40 PM EDT
President Obama’s economic advisers are pushing back fiercely against Standard & Poor’s decision to strip the nation of its AAA credit rating.
Much of the criticism stemmed from a $2 trillion math error S&P made when calculating the nation’s ratio of debt to gross domestic product, which the Treasury Department pointed out Friday.
“The magnitude of their error combined with their willingness to simply change on the spot their lead rationale in their press release once the error was pointed out was breathtaking,” said Gene Sperling, director of the National Economic Council, in a statement released Saturday.
Larry Summers, the former secretary of the Treasury and former director of the National Economic Council, on Sunday slammed Standard & Poor’s action.
“S&P’s record has been terrible and, as we have seen this weekend, its arithmetic is worse. So there’s nothing good to say about what they’ve done,” Summer’s said on CNN’s “State of the Union.”
Summers comments echoed administration officials who have accused Standard and Poor’s of lacking foundation for its report.
“A judgment flawed by a $2 trillion error speaks for itself,” a Treasury spokesman said Friday.
Treasury officials on Friday said S&P based its numbers on an inflated analysis of discretionary spending levels that exceeded the Congressional Budget’s Office by $2 trillion.
S&P acknowledged the error and removed that portion of the analysis from its statement but still decided later Friday evening to announce the downgrade, according to a Treasury source.
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Austan Goolsbee, who stepped down Friday as chairman of the White House’s Council of Economic Advisers, said S&P is guilty of sloppy calculation.
“The basic case is they made a $2 trillion math error and forgot to check their work,” Goolsbee said on NBC’s “Meet the Press.”
He noted that two other major credit-rating firms did not lower their assessment of the nation’s creditworthiness.
“The ratings agencies that didn’t make a $2 trillion math error reaffirmed the AAA status,” he said.
President Obama's top strategist, David Axelrod, termed S&P downgrade decision "largely a political analysis."
Speaking on CBS News' "Face the Nation", he said investors understood that the U.S. was "still the safest place to put your money."
What the credit rating firm wanted was "to see the political system work, they want to see a sense of compromise," said Axelrod. "The brinksmanship we saw was atrocious and that contributed to their analysis.”
-- Peter Schroeder contributed to this report.
-- This story was posted at 10:47 a.m. and has been updated.