The United States has lost its coveted top AAA credit rating.
Credit rating agency Standard & Poor's has downgraded the nation's rating for the first time since the U.S. won the top ranking in 1917.
S&P says the new deficit reduction plan passed by Congress does not go far enough to stabilize the country's debt situation.
The drop in the rating by one notch to AA-plus was expected. The three main credit agencies had warned during the budget fight that if Congress did not cut spending far enough, the country faced a downgrade.
One fear in the market has been that a downgrade would scare buyers away from U.S. debt. If that were to happen, the interest raid paid would have to rise to attract buyers. However, even without its AAA rating, U.S. debt is seen as one of the safest investments in the world.
Administration sources familiar with the discussions contend the S&P analysis is fundamentally flawed. S&P had sent the administration a draft document in the early afternoon Friday and the administration, after examining the numbers, challenged the analysis.