Obama responds to US downgrade

The president says the nation can pay its debts. What needs to change is the lack of political will in Congress.

By Kim Peterson Aug 8, 2011 2:20PM
President Barack Obama just took to the podium to defend the U.S. economy after Standard & Poor's downgraded the federal credit rating to AA-plus from AAA.

S&P doesn't doubt the nation's ability to pay its debt, Obama said. But after witnessing a month of drama over raising the debt ceiling, the agency doubts the nation's political system's ability to act.

Obama quoted investor Warren Buffett, who recently said that he would give the United States a quadruple-A rating if there were one (AAA is the highest). Obama said he and most of the world's investors agree.

"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," he said. He called our problems "imminently solvable" and said the markets continue to reaffirm U.S. credit as among the world's safest.

The challenge now, he said, is to tackle the deficits over the long term. That means combining spending cuts in defense and other areas with tax reform that asks people who can afford it to pay their fair share. That also includes "modest adjustments" to Medicare and other programs.

He said two things need to change: the lack of political will in Congress and the insistence on drawing lines in the sand.

Here are the first two things he said Congress should do when it returns from its break: extend the payroll tax cut and continue unemployment insurance for people who are looking for a job. Those are ideas that Republicans have agreed to, he added.

Obama said the United States has always had the best universities, the most innovative companies and the most productive workers. It's always had not just the capacity but the will to act.

"Markets will rise and fall, but this is the United States of America," he said. "No matter what some agency may say, we've always been and always will be a triple-A country."

There wasn't much obvious response to Obama's remarks in the markets. The Dow Jones Industrial Average dropped further after his speech, to a crushing loss of 500 points, but it was headed in that direction before he spoke.

13Comments
Aug 8, 2011 4:03PM
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what is so difficult for Washington politicians to understand that we cannot spend more that what we make without going broke?
Aug 8, 2011 2:47PM
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Since the POTUS spoke the market has dropped another 100 points. Obama needs to stay off TV and we would all be better off if he resigned.....he contributes nothing and every time he opens his mouth things get worse.
Aug 8, 2011 2:59PM
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We do not need a replay of his last speech, we need leadership.  Why is it so hard for him to understand that he needs to keep his hand out of our wallet? We will start spending when he starts cutting. 
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They could and should have started this process last year.   They haven't had a good budget for a few years now.   Even when both the Senate and House were Democrat. 

This is politics at its worse.   Blame the other guy.

The best way for President Obama to "solve' this issue is to resign.

Aug 8, 2011 5:30PM
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Thanks to all the current members of Congress for destroying any hope one might get from investing in the market for SS enhancement. I can only hope they are forced out of office by their incomprehensible handling of the debt crisis and the economy
Aug 8, 2011 4:08PM
Aug 8, 2011 5:03PM
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You can't threaten to take more and more taxes from the American people and businesses and expect them to do what we need them to do and that is relax, spend, and hire. Even though I don't make anywhere near $250,000, I know I am making room in my budget for higher taxes.
Aug 8, 2011 5:29PM
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Obama lied to get the job and now he is lying to try and keep it.
Aug 8, 2011 5:30PM
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Take our spending down to the 2006 or 2007 budget. (On a side note 2008 was the last year there was a real budget in place. Obama and the Dems haven't passed one budget since he took office. The House Republicans passed one this year after taking over but the party of NO just voted it down and proposed no alternatives. Obama's proposal was shot down by both parties.) Then after you lower spending to that level, you keep spending increases at 0% for at least 5 years. The problem is that even Republicans call it "cutting trillions" but all they did was cut growth. The debt is still going to be higher next year and the year after that and every year for the 10 years. The only difference is that instead of it going from $14 TRILLION to $25 TRILLION it will only go to $22.5 TRILLION. THAT IS NOT A CUT!!!! At $15 TRILLION, we spend $750 BILLION just in interest alone every year with a sizable portion of that $750 BILLION going to China and other foreign countries. THERE IS NO WAY THIS ECONOMY CAN GROW WITH SO MUCH OF OUR TAX DOLLARS GETTING SENT OVER SEAS. You can tax the rich and businesses to death and you still won't make a dent in the Federal deficit or debt. You would be lucky to get $400 BILLION in taxes over 10 years but it would also cost you 290,000 jobs and that is using the most liberal numbers out there, a group lined up with the Obama White House. So now instead of a debt of $22.5 TRILLION in 10 years, we would have a debt of $22.1 TRILLION, a whopping savings of not even 2%. You really think anyone can tell the difference between $22.5 and $22.1 TRILLION? Seriously? And again that is using numbers from a White House-aligned research group. No matter what, we are still talking about a minimum $7 TRILLION in new debt. This also assumes that those idiots in Washington DC don't use that extra $400 BILLION as an excuse to spend $500 BILLION more and that they actually use those tax dollars just to offset the deficit. Has that ever happened in history??? NO!!!!
Aug 8, 2011 4:41PM
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Clearly, '57 States' is the most clueless President in history!   He wonders why no one will hire, this after shoving Obamacare down the throats of business.   This program alone is responsible for a 1% increase in unemployment. 

 

The country is heading down the wrong socialist path.  Mr. Obama is a failed leader.  He has ZERO plans.  His budget could not even get a single Democrat vote in the Senate.  It lost 97-0!

Mr. Obama is leading this country into a depression. 

 

We need to fire 2500+ Donkeys next November.   This is their economy...

 

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Let's try Rep. Connie Mack's "1 percent Solution".   Can't be any worse than what  we've been doing.

Contact your Congressional leaders to put forward his plan.

Aug 8, 2011 11:31PM
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Sad but true, for all you Obama haters out there. Since the day he took office, Repubs and etc. have been trying to get him out, rather than solve problems in a new way. Thats.....the reason nothing is getting done. Obama has been trying, but NO BODY wants to work with him. In fact, they're just stalling him. They'd just rather play the fiddle while Rome Burns!....
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All the republican nominees but one, said they would have not raised the debt ceiling. It would have amounted to a terrorist attack, from your own Gov.. If you think we have seen a bad day for the dow, with a agreement signed, imagine, how much the dow would have dropped if we had defaulted. A 4000-5000 drop would have been possible. Looks like four more years for Obama, with the current crop of prospective republican nominees.
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