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After S&P downgrade, Obama says 'we must do better'

By Henry C. Jackson

Associated Press

Published: Saturday, Aug. 6 2011 11:41 a.m. MDT

WASHINGTON — After the first-ever downgrade of the U.S. government's credit rating, the White House said on Saturday that President Barack Obama believes it's clear Washington "must do better" in tackling the deficit.

While Republicans and Democrats traded blame over Friday's move by Standard & Poor's to lower its AAA credit rating, a statement from White House press secretary Jay Carney was muted in tone and did not refer directly to the downgrade.

Administration officials privately called S&P's analysis flawed. But Obama himself refrained from comment as he spent the weekend at Camp David.

The move by the key credit agency reflected disappointment with Tuesday's pact hiking the U.S. borrowing limit, which called for roughly $2 trillion in deficit cuts over the next decade. It had previously called for cuts approaching $4 trillion.

In a statement Saturday, Carney called the hard-fought deal "an important step in the right direction." However, he said "the path to getting there took too long and was at times too divisive. We must do better to make clear our nation's will, capacity and commitment to work together to tackle our major fiscal and economic challenges."

Standard & Poor's cited "difficulties in bridging the gulf between political parties" as a major reason for the downgrade to AA+, a level down from AAA. The rating agency has essentially lost faith in Washington's ability to work together to address its debt.

The downgrade, hours after markets closed on Friday, is a first for the United States since it was granted an AAA rating in 1917. S&P warned about a downgrade as far back as April. S&P said Friday the planned deficit cuts did not go far enough.

Both political parties used S&P's report to buffet their policy cases and attack the other side.

Republican House Speaker John Boehner said he hoped the downgrade served as a wake-up call to the Democratic Party.

"It is my hope this wake-up call will convince Washington Democrats that they can no longer afford to tinker around the edges of our long-term debt problem," Boehner said in a statement. "As S&P noted, reforming and preserving our entitlement programs is the key to long-term fiscal sustainability."

Senate Majority Leader Harry Reid, a Democrat, while not calling out Republicans by name, said S&P's action showed that Democrats' preferred policy approach — a mix of raising taxes and budget cuts — was the correct way to move forward.

"The action by S&P reaffirms the need for a balanced approach to deficit reduction that combines spending cuts with revenue-raising measures like closing taxpayer-funded giveaways to billionaires, oil companies and corporate jet owners," Reid said.

At least one senator, Republican Mark Kirk, called for the president to bring Congress back from its August recess to try and address the issues raised by S&P's report.

The debt-limit deal called for a nearly $1 trillion down payment on deficit cutting, and instructed a special congressional committee to draw up a blueprint for another $1 trillion-plus by November.

On Saturday, Carney said the president intends for lawmakers "to put our common commitment to a stronger recovery and a sounder long-term fiscal path above our political and ideological differences."

Obama met with Treasury Secretary Timothy Geithner in the Oval Office late Friday afternoon before leaving for his weekend at Camp David.

S&P's decision, though, clearly angered the Obama administration.

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