Saturday, August 6, 2011

White House urges unity in US

White House spokesman Jay Carney (File photo)

Source: Press TV

In response to the humiliating downgrade of the Americas AAA debt rating by S&P, The White House has urged political rivals to unite and fix the economy.

“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. 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,” AFP quoted White House spokesman Jay Carney as saying.

The Standard & Poor's credit rating agency downgraded the United States' rating by one notch to AA-plus and added a negative outlook for the first time in the history of the ratings.

The credit agency said the move comes due to US politicians' increasing failure to handle the country's huge fiscal deficit and debt load.

Last week, US President Barack Obama voted in favor of a bipartisan plan to raise the country's debt ceiling in exchange for the spending cuts, just hours before a government default.

Carney added that the US President would "strongly encourage" the 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."

According to the new bill, the debt ceiling will be raised by USD 2.4 trillion, to reach a total of USD16.7 trillion. The bill also includes a USD 2.1 trillion in spending cuts over the next decade.

This comes while the S&P believed USD 4 trillion was required in spending cuts over 10 years to retrain the US top notch rating, a proposal which was refused by the Republicans.

In addition to the S&P, Chinese leading rating agency Dagong has also downgraded America's credit rating from A+ to A. China is the largest holder of the US treasuries.

The new lower US credit rating is being seen as a major embarrassment for the Obama administration and could raise the cost of the country's borrowing.

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