US President Barack Obama has again blamed political gridlock for the credit rating downgrade that has contributed to jitters on the world financial markets.
Mr Obama stopped short of criticising ratings agency Standard & Poor’s (S&P) for downgrading the US from AAA to AA+. The White House has accused S&P of getting its sums wrong.
He said: “Markets will rise and fall, but this is the United States of America. No matter what some agency may say, we have always been and always will be a triple-A country.”
Shares on Wall Street plunged again amid growing fears that the US is heading back into recession and concerns about European sovereign debt.
The Dow Jones industrial average dropped 634.76 points, or 5.55%. Standard & Poor’s 500 Index sank 79.92 points, or 6.66%, and the Nasdaq lost 174.72 points, or 6.9%.
S&P has warned that the US faces a one in three chance of a further downgrade unless urgent action is taken. The ratings agency Moody’s said the US government debt plan must be credible to avoid it following with a downgrade of its own.
Mr Obama said he will offer new recommendations on how to cut America’s debt, including increasing taxes on the country’s wealthiest.
He said: “»Making these reforms doesn’t require any radical steps. What it does require is common sense and compromise.”
He added that he hopes the downgrade will create a new sense of urgency among politicians in Washington who have been accused of bickering and brinksmanship.
But the political finger-pointing continues with Republicans blaming Obama and Democrats labelling the crisis a ‘Tea Party downgrade’.
Reince Priebus, chairman of the Republican National Committee, hit back: “I think the people in charge need to be held responsible.
“The fish rots at the head, you have a got a President that is not engaged, he is engaged with press conferences and speeches.
“I would remind your viewers that press conferences and speeches don’t create policies.”
As part of the debt ceiling deal signed last week a joint bipartisan congressional committee is to be formed to find ways of cutting America’s spiralling deficits.
The powerful Senate Banking Committee has begun an investigation into the S&P downgrade decision. No decision has been taken on whether hearings will be held.
Source: news.sky.com/