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

WASHINGTON (AP) - President Barack Obama sought to distance himself Saturday from the bad news of the nation's first-ever credit-rating downgrade, but lawmakers and presidential candidates showed no such reticence - trading salvos over who's at fault and why.

The president, spending the weekend at Camp David, left it to press secretary Jay Carney to say it's clear Washington "must do better" in tackling soaring deficits and other economic woes.

A statement from Carney said talks that produced Tuesday's $2 trillion compromise on raising the U.S. borrowing limit had been too drawn-out and "divisive."

But the statement didn't directly address Friday's move by Standard & Poor's to drop U.S. government debt from AAA to AA+, the next level down.

While telegraphed by S&P last month, the downgrade still delivered a potentially serious blow to the nation's struggling recovery - raising the prospect of higher interest rates and fresh falls in stocks after the big selloff of the last two weeks.

S&P told investors the deficit accord "falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics."

However, administration officials sharply disputed S&P's judgment and challenged its numbers, saying the deal's deficit-cutting value had been drastically understated. They charged the company's analysis was rushed and faulty.

But S&P stood by its finding. In a conference call with reporters on Saturday, S&P officials said the company's carefully reasoned conclusion is that political gridlock in Washington has made the nation increasingly unable to control its debt.

House Speaker John Boehner, R-Ohio, asserted the downgrade "is the latest consequence of the out-of-control spending that has taken place in Washington for decades."

But Senate Majority Leader Harry Reid, D-Nev., said it "reaffirms the need for a balanced approach to deficit reduction" including not just spending cuts but higher revenues from ending tax breaks for big corporations and the rich.

Another Democrat, California Rep. George Miller, vented his anger at a "reckless extortionist legislative strategy" by the GOP. Making deep cuts a condition of paying the nation's bills "has clearly done more to sow deep anxiety and uncertainty over the economy than nearly any other set of events," he said.

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

Outside Washington, presidential hopefuls found fresh ammunition in the ratings setback.

Former Massachusetts governor and GOP frontrunner Mitt Romney wrote, "America's creditworthiness just became the latest casualty in President Obama's failed record of leadership."

Said former Minnesota Gov. Tim Pawlenty: "What we should be talking about is downgrading Barack Obama from president of the United States." Campaigning Saturday in Grinnell, Iowa, Pawlenty said, "We need to have a president who understands what it means to put our full faith and credit in the American people."

Also in Iowa, Rep. Michele Bachmann, R-Minn., called for Treasury Secretary Timothy Geithner's ouster. Bachman, who voted against the debt deal, told a Fox News interviewer, "This president has destroyed the credit rating of the United States through ... his inability to control government spending."

By contrast, Obama was conspicuously silent. And administration officials who were scathing in private about the S&P move declined to be quoted on the record - the White House apparently not wishing to elevate the decision with presidential and other attention.

Aides also noted that two other ratings agencies - Moody's and Fitch - are for now keeping the AAA rating for U.S. debt.

Meantime, they noted Obama had tried but failed to broker a much bigger deficit deal.

In his statement, Carney focused on the months of bitter partisan wrangling that led to the 11th-hour compromise announced Sunday - a bare two days before the Treasury Department's deadline for a threatened government default.

"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," Carney said.

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.

Carney said the president will urge committee members and other lawmakers "to put our common commitment to a stronger recovery and a sounder long-term fiscal path above our political and ideological differences."


Associated Press writers Martin Crutsinger, Henry C. Jackson, Liz Sidoti and Tom Raum contributed to this report.

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