President Barack Obama used his 10-minute White House speech today to cast blame on the tea party movement for Standard & Poor’s credit downgrade. In the speech, he again urged Washington legislators to approve a”grand bargain” that would trim federal spending, “adjust” entitlement programs and approve a “tax reform that will ask those who can afford it to pay their fair share.”
“The threat of default was used as a bargaining chip,” Obama said, without identifying any legislators or groups. That threat “has roiled the [stock] market, dampened consumer confidence, and slowed the pace of recovery,” he said.
The unnamed advocates are widely assumed to be the Republican legislators and their supporters in Tea Party movement who urged reductions in federal spending plans.
Standard & Poor’s downgraded the nation’s credit rating, the president added, “not so much because they doubted our ability to pay our debts if we make good decisions [but because] they doubted our political system’s ability to act.”
Obama seemed to agree, saying, “It is not a lack of plans or policies that is the problem. It is the lack of political will in Washington … [and] a refusal to put what’s best for the country ahead of self-interest, or party or ideology.”
GOP officials pushed back quickly. “Raising taxes is simply the wrong approach,” said a statement from Majority Leader John Boehner. “We passed a budget that would spend $6.2 trillion less than the President’s proposal; we passed a Cut, Cap, and Balance plan that would save trillions of dollars; and, with the Budget Control Act, we passed a meaningful down payment on deficit reduction – all without tax increases … providing economic certainty and creating an environment in which businesses can invest and jobs can flourish must remain our number-one focus,” he said.
“The markets have rendered their verdict on Barack Obama’s speech and it was not a good one,” according to a tweet from Reince Priebus, the chairman of the Republican National Committee.
Monday was the first trading day after the credit downgrade, and the Dow Jones index fell below 11,000 during Obama’s speech, before ending 635 points down for the day.
In March the Congressional Budget Office predicted that Obama’s 2012 budget request would, by 2021, add $9.5 trillion to the existing national debt of $14.3 trillion. GOP legislators opposed Obama’s spending plan, and won instead his signature on a debt ceiling deal that could trim projected spending by as much as $2.4 trillion over the next 10 years.
The first round of the debt ceiling deal identified $900 billion in cuts.
The second round of cuts is to be be identified by a “super committee” of 12 legislators. It should not call for further cuts to defense and discretionary programs, Obama said, because “there is not much further we can cut in either of those categories.” Discretionary programs include police, education and research funding, some welfare programs, and most government agencies.
The 12-member committee should draft a tax-reform package that raises revenues, and should trim spending on federal health care programs so they can be preserved for the long run, 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,” he promised.