President delivers remarks on downgrade
Yesterday, the President delivered remarks on the recent credit rating downgrade by Standard & Poor’s. The downgrade came shortly after the prolonged and contentious debate over how to raise the debt ceiling. The uncertainty fostered by the discussions and resulting plan pushed the agency to downgrade the United States for the first time ever.
The President’s address was intended to reassure markets that the United States remains one of the safest investments in the world. Below are some highlights from his remarks:
On Friday, we learned that the United States received a downgrade by one of the credit rating agencies — not so much because they doubt our ability to pay our debt if we make good decisions, but because after witnessing a month of wrangling over raising the debt ceiling, they doubted our political system’s ability to act. The markets, on the other hand, continue to believe our credit status is AAA.
The fact is, we didn’t need a rating agency to tell us that we need a balanced, long-term approach to deficit reduction.
With respect to debt, our problem is not confidence in our credit — the markets continue to reaffirm our credit as among the world’s safest. Our challenge is the need to tackle our deficits over the long term.
So it’s not a lack of plans or policies that’s the problem here. It’s a lack of political will in Washington. 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 or ideology. And that’s what we need to change.
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.
Despite the President’s assurances, financial markets continued to reel on the first day of trading after the downgrade. The Dow lost 634 points, or 5.6%, yesterday – its worst day since December 2008. While the market has since regained some of these losses, the severe fluctuations indicate an unhealthy environment of economic uncertainty.
Washington has an unfortunate history of overspending, petty politics, and unwillingness to make the difficult choices. After recent events, it’s clear that the country can no longer sustain these habits. Lawmakers must step up to the plate and do what other Congress’ have been unable to do: enact the necessary spending reforms to restore fiscal responsibility and allow the economy to stabilize and the recovery take hold.