President Barack Obama today essentially dismissed the first-ever downgrade of the U.S. credit rating, trying to reassure investors and the public that the nation’s leaders need only show more “common sense and compromise” to tame a staggering accumulation of debt. Seeking to demonstrate command in a volatile economic climate, Obama says he hoped the decision by Standard & Poor’s would at least give Congress a renewed sense of urgency to tackle debt problems. Obama says that must be done mainly by taking on the politically difficult issues of reforming taxes and entitlement programs in the coming months. In his first public comments on the credit downgrade, which S&P announced late Friday, Obama says Washington had the power to fix its own political dysfunction. “Markets will rise and fall,” he says. “But this is the United States of America. No matter what some agency may say, we’ve always been and always will be a triple-A country.” S&P officials dropped the government’s rating to AA+ from the top rating, AAA, based on a lack of confidence that Congress and the president will be able to shake their political gridlock and make more serious reductions in the long-term debt. The agency was dissatisfied with the deal lawmakers reached last week just in time to prevent a government default. Obama says most of the world’s investors agree that the United States remains a wise place to put their money.
Meanwhile, Wall Street had its worst day since 2008. The Dow Jones Industrial Average dropped 634 points, or 5.5%, to finish below 11,000 for the first time since November 2008. The S&P lost 80 points, or 6.5%, to finish at 1,120 and the Nasdaq Composite dropped 175 points, or 7%, to end at 2,358.
