Speaking for the first time since the Standard and Poor's brought down the US debt rating from AAA to AA+ sending the global stock markets tumbling, Obama said he would present his own proposals for overcoming the debt woes in the "coming weeks" and asked the Republicans to accept tax hikes on the most affluent Americans.
"No matter what some agency may say, we have always been and always will be a triple A country," Obama said, arguing global investors still saw the US economy as one of the safest investment destinations in the world.
"Here's the good news. Our problems are imminently solvable. And we know what we have to do to solve them," Obama said at the White House.
The credit rating of the United States has been downgraded mainly because the Standard and Poor's has doubted America's political system's ability to act, Obama said. "On Friday we learned that the United States received a downgrade by one of the credit rating agencies, not so much because they doubt our ability to pay our debt if we make good decisions, but because after witnessing a month of wrangling over raising the debt ceiling, they doubted our political system's ability to act," he said.
"The markets, on the other hand, continue to believe that our credit status is AAA. In fact, Warren Buffett, who knows a thing or two about good investments, said, "if there were a AAAA rating, I'd give the United States that."
"I and most of the world's investors agree," he said.
"That doesn't mean we don't have a problem. The fact is, we didn't need a rating agency to tell us that we need a balanced long- term approach to deficit reduction. That was true last week. That was true last year. That was true the day I took office," Obama said in his statement to the press.The US did not need a rating agency to tell us that the gridlock in Washington over the last several months has not been constructive, to say the least, Obama said.
US stocks on Aug 8 hit fresh lows for the day as Obama defended Washington's credit-worthiness and declared that the United States "always will be a triple-A country".
"We knew from the outset that a prolonged debate over the debt ceiling -- a debate where the threat of default was used as a bargaining chip -- could do enormous damage to our economy and the world's," Obama said.
However, he admitted sharp political differences at home was hampering efforts to fix the US economy's woes and called on all sides to agree on a balanced solution to ease the deficit tipped to hit 1.6 trillion dollars this year.The president said the solution to US deficit woes lay in a combination of tax hikes on the richest Americans and modest cuts in state-run health programmes plagued by rising costs like healthcare for the elderly.
"Making these reforms doesn't require any radical step. What it does require is common sense and compromise," Obama said.
The Republicans have, however, refused to accept any tax raise and Obama's Democratic allies have balked at any cuts to medicare or other aspects of the American social safety net.
Obama said "it's not a lack of plans or policies that is the problem here. It's a lack of political will in Washington".
Obama said the US is going through a tough time right now. "We''ve been going through a tough time for the last two and a half years. And I know a lot of people are worried about the future," he said.
"But here's what I also know. There will always be economic factors that we can't control: earthquakes, spikes in oil prices, slowdowns in other parts of the world. But how we respond to those tests, that's entirely up to us. Markets will rise and fall, but this is the United States of America. For all of the challenges we face, we continue to have the best universities, some of the most productive workers, the most innovative companies, the most adventurous entrepreneurs on earth," he said.