WASHINGTON — President Barack Obama vowed Monday that America would always be a “triple-A country,” defending US credit after a historic downgrade and insisting the reeling economy was “eminently” fixable.
Speaking against a backdrop of tumbling global stock markets, Obama said he would present his own solutions for mending US debt woes in the “coming weeks” but again called on Republicans to accept tax hikes on the wealthy.
As he spoke, jittery investors sent the Dow Jones Industrial Average plummeting 4.5 percent, sinking below 11,000 points.
The broader S&P 500 lost 5.7 percent, while the tech-heavy Nasdaq Composite plunged 5.6 percent, on a day of market turmoil around the world sparked by US debt fears and wider concern about Europe’s debt crisis.
The president was making his first public comments on the first-ever decision by ratings agency Standard & Poor’s on Friday to downgrade the AAA credit rating on US sovereign debt to AA+ with a negative outlook.
The agency argued that the political gridlock in Washington between Obama and Republicans, including the ultra-conservative Tea Party faction, could leave the United States unable to solve its fiscal crisis.
But Obama countered that investors still saw the US economy has one of the safest investments in the world.
“No matter what some agency may say, we have always been and always will be a triple-A country,” Obama said.
But he conceded that partisan feuding in Washington was hampering efforts to fix the economy, and called on all sides to unite on a “balanced” approach to ease the deficit, tipped to hit $1.6 trillion this year.
“Here’s the good news. Our problems are eminently solvable. And we know what we have to do to solve them,” Obama said at the White House.
The president said the solution to US deficit woes was a mixture of tax rises on the most affluent Americans and modest cuts to state-run health programs plagued by rising costs, like Medicare for the elderly.
“Making these reforms doesn’t require any radical steps. What it does require is common sense and compromise,” Obama said.
The formula was a failed part of an Obama push for a “grand bargain” during the debate over raising the government’s borrowing authority, which resulted in a deal last week that narrowly averted a disastrous debt default.
Republicans refuse to countenance any kind of tax rises and Obama’s Democratic allies have balked at any cuts to Medicare or other aspects of the American social safety net.
“It’s not a lack of plans or policies that is the problem here. It’s a lack of political will in Washington,” Obama said, billing a congressional committee set up under the debt ceiling deal as a way out of the crisis.
“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 of ideology. And that’s what we need to change.”
But within minutes of Obama’s speech, covered by television news networks alongside a split screen showing the Dow Jones Industrial Average plunging by hundreds of points, Republicans reaffirmed their positions.
Mitch McConnell, the top Republican in the Senate, said he disagreed with Obama’s call for “tax hikes on American families and job creators.”
But McConnell said he did believe the congressional committee “can and should focus on entitlement reform, an area where the president has already said he is willing to support significant savings.”