WASHINGTON - President Barack Obama, now reeling in polls, has said the U. S. budget 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.
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