“No matter what some agency may say, we've always been and always will be a triple-A country,” President Obama said at a news conference Monday, referring to Standard & Poor's (S&P) decision to downgrade the nation's credit rating from AAA to AA+.
S&P's decision, according to Obama, was “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 our 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, in fact, Warren Buffett, who knows a thing or two about investments, said, 'if there were a quadruple rating, I'd give the United States that.' I and most of the world's investors agree.”
“That doesn't mean we don't have a problem,” added Obama, “Fact is, we didn't need a ratings agency to tell us that we need a balanced, long-term approach to deficit reduction.”
Obama said that the spending cuts recently passed by Congress and signed into law are a good start, but to get long term spending under control, the nation needs “two additional steps, tax reform that will ask those who can afford it to pay their fair share and modest adjustments to health care programs like Medicare.”
Obama's call for Medicare reform represents an important admission. He used to argue that the Medicare reforms in the 2010 health care law would reduce deficits and further reforms would not be required. Many Democrats still maintain that position and will resist changes to Medicare that would curtail growth of the program.
Obama also noted that there have already been bipartisan agreements on tax reform and entitlement reform: “Republicans and Democrats on the bipartisan fiscal commission that I set up put forth good proposals. Republicans and Democrats in the Senate's 'Gang of Six' came up with some good proposals. John Boehner and I came up with some good proposals when we came close to agreeing on a 'Grand Bargain'.”
In order to pass deficit reduction legislation similar to these proposals, Obama encouraged both political parties to put the needs of the country before their partisan and ideological differences.
“So it's not a lack of plans or policies that are a 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. That's what we need to change,” Obama said.
In order to help the nation's high unemployment rate, currently at 9.1 percent, Obama asked Congress to extend the payroll tax cut next year, extend unemployment benefits, and increase spending on infrastructure projects.
Obama also used the occasion to praise the work of those who serve in the military and remember the lives of the troops lost in Afghanistan on Saturday.
“These men and women put their lives on the line for the values that bind us together as a nation. They come from different places and their background and beliefs reflect the rich diversity of America, but no matter what differences they might have as individuals, they serve this nation as a team, they meet their responsibilities together, and some them, like the 30 Americans who were lost this weekend, give their lives for the country. Our responsibility is to ensure that their legacy is an America that reflects their courage, their commitment, and their sense of common purpose,” Obama said.
The Dow Jones Industrial Average closed 634 points down after the morning’s opening bell.