As stocks tumbled, President Obama sought to inject a glimmer of hope into a gloomy financial picture Monday, asserting that “our problems are eminently solvable.”
The president’s remarks came after the historic downgrade Friday of the US credit rating by Standard & Poor’s from AAA to AA+, sparking a sell-off by investors. By close of business, the Dow Jones Industrial Average had dropped 634.75 points, closing at 10,809.85 – below the 11,000 mark for the first time since October. Last week the Dow fell 5.8 percent, its biggest decline since 2008.
Mr. Obama spoke defiantly as he described a failure of politics, not the nation's credit-worthiness, for Washington’s inability to set the nation on a sound fiscal path.
“It's not a lack of plans or policies that's the problem here,” Obama said, speaking from the State Dining Room in the White House. “It's a lack of political will in Washington. 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 or ideology. And that's what we need to change.”
“My hope,” the president added, “is that Friday’s news will give us a new sense of urgency.”
One week ago, Democrats and Republicans reached agreement on a deficit reduction plan that allowed a boost in the US debt ceiling above $14.3 trillion. The deal averted a potential default on US debt, but was not large enough to prevent a lowered credit rating by S&P. Under the terms of the deal, a 12-member bipartisan House-Senate committee must come up with at least $1.2 trillion in addition deficit reduction by the end of the year.
Obama said the inability to reach agreement on long-term deficit reduction was not for lack of good ideas. He praised the “good proposals” put forth by his bipartisan deficit commission last December and by the Senate’s bipartisan Gang of Six, in addition to those that he and House Speaker John Boehner came up with in their failed attempt at a “grand bargain” over deficit reduction.
Looking ahead to the new 12-member “super-committee,” whose members have not yet been named, Obama said, “I intend to present my own recommendations over the coming weeks on how we should proceed. And that committee will have this administration's full cooperation, and I assure you we will stay on it until we get the job done.”
Obama repeated his call for a “balanced long-term approach to deficit reduction,” which means including tax increases in addition to “modest adjustments” to Medicare. And he invoked American exceptionalism, praising American resilience and ingenuity in the face of challenges.
In his remarks, Obama also praised the 30 US special forces and crew members who perished over the weekend when their helicopter was shot down during a mission in Afghanistan. It was the single worst incident for the US in the 10-year war.
“We will press on and we will succeed,” Obama said.
On the campaign trail, the US’s credit downgrade was Topic A – and Obama came in for heavy blame. Former Massachusetts Gov. Mitt Romney, frontrunner for the GOP nomination, attributed the downgrade to “the failure of leadership by the president.”
“It seems that they would substitute Harry Truman’s ‘the buck stops here’ with the new motto of the White House, which is ‘the buck stops somewhere else,’ ” Romney said Monday in New Hampshire, according to the Washington Post. “The truth is, the buck does stop at the president’s desk and he needs to exert the leadership necessary to restore America’s financial foundation, the credibility of our fiscal capacity and restore once again the balance sheet upon which our economy rests.”
Rep. Michele Bachmann of Minnesota, who is polling second after Mr. Romney among declared candidates, accused Obama of “hiding out” at Camp David over the weekend, pretending that the downgrade didn’t matter and hoping the markets wouldn’t notice.
“He came out just long enough today to again declare that raising taxes and cutting Medicare are his only solutions to our nation's economic crisis,” she said in a statement from Atlantic, Iowa, where she was campaigning. “He dismissed the downgrade of our country's credit rating, and argued that there's no more room for spending cuts in Washington.”
"The president says our nation's economic problems are 'eminently solvable,' ” she said, “but it is painfully obvious that President Obama does not have the leadership capacity to put our country back on the right track."