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One of the top credit rating agencies, Standard & Poor's, has downgraded the United States' top-notch AAA rating for the first time ever. S&P cut the long-term US rating by one notch to AA+ with a negative outlook, citing concerns about budget deficits. The agency said the deficit reduction plan passed by the US Congress on Tuesday did not go far enough. Washington was locked in months of acrimonious partisan bickering over a bill to raise the US debt ceiling. As rumours swirled earlier about the downgrade, unnamed officials in Washington had told US media that S&P's analysis of the American economic situation was deeply flawed. Correspondents say a downgrade could further erode global investors' confidence in the world's largest economy, which is already struggling with huge debts, unemployment of 9.1%, and beset by fears of a possible double-dip recession. S&P said in its report issued late on Friday: "The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilise the government's medium-term debt dynamics. "More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges." The agency said it might lower the US long-term rating another notch to AA within the next two years if its deficit reduction measures were deemed inadequate. S&P noted that the bill passed by Congress this week did not include new revenues - Republicans had staunchly opposed President Barack Obama's calls for tax rises to help pay off America's deficit. The credit agency also noted that the legislation contained only minor policy changes to Medicare, an entitlement programme dear to Democrats. "The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed," it added. S&P said the Republicans and Democrats had only been able to agree "relatively modest savings", which fell "well short" of what had been envisaged.