White House on downgrade: This is why Obama ‘pushed for grand bargain’

C.J. Ciaramella Contributor
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The White House called for a long-term bipartisan compromise to “put our nation on a stronger fiscal footing” after Standard & Poor’s downgraded the U.S. credit rating Friday night.

“Over the past weeks and months the President repeatedly called for substantial deficit reduction through both long-term entitlement changes and revenues through tax reform, with additional measures to spark jobs and strengthen our recovery,” White House Press Secretary Jay Carney said in a statement. “That is why the President pushed for a grand bargain that would include all of these elements and require compromise and cooperation from all sides.”

S&P said in a statement that the deal brokered by Congress last week to avoid a default “falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.”

“More broadly,” S&P said, “the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.”

The Treasury Department shot back at S&P, saying the bond rating agency had based its initial decision on faulty math, specifically an error that overestimated the country’s discretionary spending levels by $2 trillion.

“A judgment flawed by a $2 trillion error speaks for itself,” said a Treasury spokesperson. (RELATED: Standard & Poor’s ratings head: U.S. could be downgraded even further)

In the White House statement, Carney said, “Over the coming weeks the President will strongly encourage the bipartisan fiscal committee as well as all members of Congress to put our common commitment to a stronger recovery and a sounder long-term fiscal path above our political and ideological differences.”

Democratic talking points have mirrored the White House’s statement. House Minority Leader Nancy Pelosi and Senate Majority Leader Harry Reid both also touted the importance of strong bipartisan action by the joint committee, which will be formed in accordance with last week’s debt agreement to find $1.5 trillion dollars in budget cuts over the next decade.

Friday night’s action by S&P was the first time the U.S. credit rating has been downgraded since 1917. The country still maintains an AAA rating from rival bond rating firms Moody’s Investors Service and Fitch Ratings.