S&P affirms reduced U.S. credit rating

Los Angeles, along with other state and local governments, fired Standard and Poor's after the ratings agency downgraded their credit for having "significant exposure" to U.S. government securities. Bill Whitaker reports.

(CBS/AP) WASHINGTON - The U.S. government's credit record remains blemished, according to Standard & Poor's.

The credit rating agency, which downgraded America's long-term debt last year, on Friday reiterated its assessment and asserted that political leaders aren't addressing the federal debt burden.

"We believe that political polarization has increased in recent years," the agency said in a statement.

S&P says it's keeping its rating of U.S. long-term debt at "AA+." It cut its rating in August after a battle in Congress over whether to raise the nation's borrowing limit. Previously, the government had received a "AAA" rating, reserved for the most credit-worthy borrowers.

U.S. statement on U.S. debt downgrade
S&P exec: No regrets on downgrading U.S. debt

Still, S&P says the U.S. has an "adaptable and resilient'' economy, and many governments hold dollar reserves, a sign of confidence in the currency. The firm also said the Federal Reserve has "strong control" over the U.S. money supply and noted the central bank's ability to affect the economy through monetary policy.

"The Fed has kept inflation (measured by CPI) at less than percent in each of the past 15 years," S&P said. "In addition, the Fed's operational independence is well-established and commands a wide array of monetary policy instruments."

Investors seeking safety have been pouring money into Treasurys and driving down the interest they pay. The yield on the 10-year Treasury, at 1.64 percent, is near a record low.

S&P attributed the rate cut last August to what the firm at the time termed a "prolonged controversy" over raising the nation's borrowing limit and to ongoing political conflict in Washington over public spending and taxes. The downgrade contributed to a stock market plunge and a sharp fall in both consumer and business confidence.

John Piecuch, a spokesman for S&P, said Friday that the agency revisits its credit ratings every year. Friday's announcement came after "a routine review," he said.