In an unusual Saturday conference call with reporters, senior S. P. officials insisted the ratings firm hadn’t overstepped its bounds by focusing on the political paralysis in Washington as much as fiscal policy in determining the new rating. “The debacle over the debt ceiling continued until almost the midnight hour,” said John B. Chambers, chairman of S. P.’s sovereign ratings committee.
Another S. P. official, David Beers, added that “fiscal policy, like other government policy, is fundamentally a political process.”
But, rather than building consensus on how to best rein in the nation’s staggering debt, the downgrade left political leaders as divided as ever. Politicians on both sides used the decision to bolster their own ideological positions.
Officials at the White House and Treasury criticized S. P.’s action as based on faulty budget accounting that did not factor in the just-enacted deal for increasing the debt limit.
Gene Sperling, the director of the White House national economic council, called the difference, totaling over $2 trillion, “breathtaking” and said that “the amateurism it displayed” suggested “an institution starting with a conclusion and shaping any arguments to fit it.”
Even as the ratings agency insisted on Saturday that its move shouldn’t have come as a shock, it reverberated around the world. Officials from China to Europe scrambled to assess the downgrade’s impact on the already troubled global economy, and political leaders in the United States sought to frame the issue in their favor.
Republican presidential candidates on Saturday seized on the downgrade as a new line of criticism against President Obama, suggesting that ultimate responsibility rests in the Oval Office.
“It happened on your watch, Mr. President,” Representative Michele Bachmann said, drawing applause at an afternoon rally in Iowa. “You were AWOL. You were missing in action.”
The White House blamed Washington’s polarized political climate for the downgrade. “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,” the White House press secretary, Jay Carney, said in a statement.
The ratings agency’s action puts additional pressure on a still-to-be-named Congressional committee to find additional spending cuts, tax increases or both to bring down the inexorably rising national debt.
The debt-limit law agreement set spending caps in the fiscal year that begins Oct. 1 and calls for the bipartisan Congressional “supercommittee” to propose more deficit reduction — for up to $2.5 trillion in combined savings over a decade.
Senate Majority Leader Harry Reid said the downgrade affirmed the need for the Democrats’ approach, balancing spending cuts with higher revenue from the wealthy and corporations.
The decision, he said, “shows why leaders should appoint members who will approach the committee’s work with an open mind — instead of hardliners who have already ruled out the balanced approach that the markets and rating agencies like S. P. are demanding.”
House Speaker John A. Boehner of Ohio, who runs the House with his anti-tax Republican majority, said that, “decades of reckless spending cannot be reversed immediately, especially when the Democrats who run Washington remain unwilling to make the tough choices required to put America on solid ground.”
While American politicians sparred, China, the largest foreign holder of United States debt, said on Saturday that Washington needed to “cure its addiction to debts” and “live within its means,” just hours after the S. P. downgrade.
Europeans had girded for a possible downgrade, but the news was received with a degree of alarm in the corridors of power across the Continent.
Jackie Calmes, Binyamin Appelbaum, Louise Story, Julie Creswell, Liz Alderman, Jack Ewing, James Risen and David Barboza contributed reporting.
Article source: http://feeds.nytimes.com/click.phdo?i=f8b0b6d66cef640562e923bf107c2756
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