U.S. President Barack Obama begins a tour promoting his proposal to cut long-term budget deficits with a new urgency after Standard & Poor’s warned that the nation’s AAA credit rating is in peril.
The divide between Republicans and Democrats in Congress over combating the nation’s debt also is spotlighted by Standard & Poor’s lowering of the long-term U.S. credit outlook to "negative," with each side saying the alert bolsters their competing arguments.
While Obama’s trip that begins today with a town-hall meeting in Virginia is partly billed as an effort to gain support for cuts in popular programs, Obama administration officials said they don’t expect him to refer to the S&P report unless he is asked.
Obama is scheduled to spend three days traveling through states crucial to his 2012 re-election campaign to publicize his plan to reduce cumulative deficits by $4 trillion over 12 years. The plan includes spending cuts on defense and domestic programs and calls for raising taxes on the wealthy.
He will hold town-hall meetings today in Annandale, Virginia, and later in the week at Facebook Inc.’s headquarters in Palo Alto, California, and in Reno, Nevada.
On the eve of the tour, Obama underlined his commitment to reducing the deficit in a series of interviews with local television anchors in swing states conducted at the White House.
"We’ve got to make sure we’re living within our means," Obama told a Raleigh, North Carolina, television station.
Democrats say the revision in the long-term credit outlook for the U.S. issued by New York-based S&P helps make the case for a broad agreement based on the debt-cutting plan Obama outlined last week. Republicans say the ratings firm’s report reinforces their call for deeper spending cuts than the president and other Democrats have been willing to consider.
S&P said the government risks losing its AAA credit rating unless policy makers agree on a plan by 2013 to reduce budget deficits and the national debt. The company maintained its top rating on U.S. long-term debt while lowering the outlook to "negative" for the first time.
The White House downplayed the negative outlook, saying it was based on a faulty appraisal of the political climate.
House Majority Leader Eric Cantor, a Virginia Republican, called the S&P revision "a wake-up call for those in Washington asking Congress to blindly increase the debt limit" without significant spending cuts.
The negative outlook on long-term U.S. debt issued by S&P "makes clear that the debt-limit increase proposed by the Obama administration must be accompanied by meaningful fiscal reforms that immediately reduce federal spending and stop our nation from digging itself further into debt," Cantor said.
Congress is facing a vote as early as next month on raising the government’s $14.29-trillion U.S. legal debt limit. The Treasury Department projects that it will hit the cap on May 16, though it could use emergency measures to avoid default until about July 8.
Obama and members of his economic team have said that failure to approve an increase could have catastrophic consequences for the U.S. economy and financial markets.
Related Stories
