WASHINGTON, Aug. 8 (UPI) — President Obama said the U.S. deficit problems were “imminently solvable” and that he hoped the credit downgrade would spur Washington to act.
Standard and Poor’s downgraded the U.S. credit rating Friday from AAA to AA+ because “they doubted our political system’s ability to act,” Obama said in a statement.
“The fact is, we didn’t need a rating agency to tell us we needed a balanced, long-term approach to deficit reduction,” he said. “And we didn’t need a rating agency to tell us that the gridlock in Washington over the last several months has not been constructive, to say the least.”
U.S. stock indexes began Monday low and fell from there. At one point during the afternoon, the Dow Jones industrial average fell below 11,000 points for the first time in months. While Obama spoke, the Dow losses hovered around 425 points, then topped 500 after he finished.
Without singling out anyone, Obama said people in Washington knew the protracted debate over raising the debt ceiling, “a debate where the threat of default was used as a bargaining chip, could do enormous damage to our economy and the world’s.”
“That threat, coming after a string of economic disruptions in Europe, Japan and the Middle East, has now roiled the markets and dampened consumer confidence and slowed the pace of recovery,” he said.
But the good news, he said, is that “our problems are imminently solvable. And we know what we have to do to solve them.”
The challenge is reducing the federal deficits over the long term, Obama said.
Now that an agreement has been reached to raise the debt limit and cut defense and domestic spending, Washington must combine the spending cuts with “two additional steps — tax reform that will ask those who can afford it to pay their fair share and modest adjustments to healthcare programs like Medicare.”
The reforms don’t require “radical steps,” but “common sense and compromise,” he said.
Good proposals on reducing the nation’s debt and deficit have come from his bipartisan commission on reducing the debt, the so-called “Gang of Six” in the Senate and discussions he and House Speaker John Boehner, R-Ohio, during debt ceiling discussions.
“So it’s not a lack of plans or policies that is the problem here. It’s a lack of political will in Washington,” Obama said. “It’s the insistence on drawing lines in the sand, a refusal to put what’s best for the country ahead of self-interest or party of ideology. And that’s what we need to change.”
He said he realizes there’s some skepticism that Republicans and Democrats on the so-called “super committee,” this joint committee set up in the debt ceiling agreement, will be able to reach a compromise.
“But my hope is that Friday’s news will give us a renewed sense of urgency,” Obama said. “I intend to present my own recommendations over the coming weeks on how we should proceed.”
While the issues of debt and deficits are worrisome, Americans are still concerned about jobs, Obama said.
He again pushed for an extension of the payroll tax holiday and unemployment benefits and construction work on the nation’s infrastructure as ways to help boost jobs and the economy.
Obama said he recognizes the United States has gone through some tough times for the last 36 months.
“But here’s what I also know. There will always be economic factors that we can’t control. … Markets will rise and fall, but this is the United States of America. No matter what some agency may say, we’ve always been and always will be a AAA country.”