President Barack Obama said Monday that the United States will always be a AAA-rated country, responding to Standard & Poor's decision late Friday to cut the long-term debt rating for the U.S. by one notch to AA+ from AAA.
Speaking on the downgrade issue at the White House Monday afternoon, Obama urged lawmakers to work together to tackle the nation’s deficit.
“We didn’t need a rating agency to tell us we need a balanced, long-term approach to deficit reduction,” he said. “My hope is that Friday’s news will give us a renewed sense of urgency.”
Earlier, in an interview on NBC and CNBC, Treasury Secretary Timothy Geithner said the rating agency "has shown really terrible judgment" and claimed its downgrade wouldn't affect investors' faith in U.S. debt.
Standard & Poor's Monday downgraded the credit ratings of dozens of U.S. government-related bond issues as officials for the rating agency continued to defend their actions, which caused stock markets to plunge around the world.
The agency lowered the formerly top-notch ratings on bonds issued by mortgage lenders Fannie Mae and Freddie Mac as well as farm lenders; long-term U.S. government-backed debt issued by 32 banks and credit unions; and three major clearinghouses, which are used to execute trades of stocks, bonds and options.
All the downgrades were from AAA to AA+. S&P says the agencies and banks all have debt that is exposed to economic volatility and a further downgrade of long-term U.S. debt.
The moves Monday followed S&P's decision late Friday to cut the long-term debt rating for the U.S. by one notch to AA+ from AAA. Friday's downgrade wasn't unexpected, but it comes when investors are already feeling nervous about a weak U.S. economy, European debt problems and Japan's recovery from its March earthquake.
S&P managing director John Chambers, speaking on msnbc's "Morning Joe," said it was unlikely that the agency would restore the nation's AAA rating anytime soon.
"If you corrected the political settings that would certainly improve the credit standing," he said. "But let’s not forget the damage that has been done to the credibility outside the United States about this debacle over raising the debt ceiling."
He said it was "unimaginable" that the government came within 10 hours of having a major cash-flow crisis.
"This simply does not exist with other governments," he said.
Chambers said that five countries had previously lost their AAA status and then subsequently regained it: Australia, Canada, Denmark, Finland and Sweden.
"All of them undertook significant fiscal reform that markedly reduced their level of debt to GDP," he said.
Chambers said it took the five countries from nine to 18 years to regain AAA status.
Officials at Standard & Poor's say they will also indicate shortly how local and state governments will be affected by their decision on Friday to lower the long-term U.S. debt from AAA to AA+.
Chambers said on Sunday there is a one in three chance of a further U.S. credit rating downgrade over the next six months to two years.
"We have a negative outlook ... from six months to 24 months," he said on ABC's "This Week."
Moody's, another of the other key credit-rating agencies, on Monday stood by its top Aaa rating for the United States. It said it could downgrade the U.S. if it doesn't improve its long-term finances by cutting its deficit, "but it is early to conclude that such measures will not be forthcoming."