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US calls for end to bickering after credit rating loss

Last Updated: Sunday, August 7, 2011 - 16:23

Washington: The White House has called for an end to the political gridlock blamed for the first-ever US credit rating downgrade, even as allies voiced confidence in the world's largest economy.
Standard & Poor's cut the US rating for the first time in history, by one notch from its top-flight triple-A to AA+, saying US politicians were increasingly unable to manage the country's huge fiscal deficit and debt.
The agency added a negative outlook, warning there was a chance the rating could be downgraded further within two years if progress was not made in balancing the country's lopsided finances.
Washington's allies in Europe and Asia rallied behind the United States, warning against over-reaction to the downgrade, but China, the largest foreign holder of US Treasuries, slammed the US "addiction" to debt.
President Barack Obama stayed out of sight on Saturday at the Camp David presidential retreat, but the White House chose to take the moral and political high ground, calling for a reality check among Washington's warring factions in the wake of a controversial deal to raise the nation's debt ceiling.
"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," White House spokesman Jay Carney said in a statement.
"The bipartisan compromise on deficit reduction was an important step in the right direction. Yet, the path to getting there took too long and was at times too divisive," Carney said.
He said Obama would encourage Democratic and Republican lawmakers to put their "common commitment to a stronger recovery and a sounder long-term fiscal path" above "political and ideological differences."
The rating cut, which came after the US markets closed on Friday, thereby allowing the world to digest the news over the weekend, was the first time the United States had been downgraded since it received an AAA rating from Moody's in 1917.
It has held the AAA S&P rating since 1941. Other G7 nations such as Britain, Canada, France and Germany maintain the top rating.
In a stinging English-language commentary carried by the official Xinhua news agency, China said it had "every right" to demand Washington address its structural debt problems and safeguard Chinese dollar assets.
Other Asian nations such as Japan and South Korea reacted cautiously and, along with Australia, warned against over-reaction. Russia and France said they were untroubled by the rating slip, and Britain's Business Secretary Vince Cable called it "entirely predictable."


First Published: Sunday, August 7, 2011 - 16:23
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