President Obama sought on Monday to calm investor jitters and rebuild consumer confidence, assuring the nation in the midst of a steep Wall Street decline that the country will get past the current crisis, calling on Congress to work with him with a renewed “sense of urgency.”
Speaking out for the first time since Friday when one of the credit rating agencies, Standard & Poor’s, announced it was lowering the country’s rating from AAA to AA+, he urged Americans not to overreact to either the markets or ratings reduction. There is, he insisted, “good news” among the gloom.
“Markets will rise and fall. But this is the United States of America,” he said firmly. “No matter what some agency may say, we have always been and always will be a AAA country.”
The reaction from the markets was not immediately encouraging. The Dow was down 409 points when he started speaking. Eleven minutes later, when he concluded, it was down 427. Less than an hour later, it was down by 473 points.
But he urged investors to take a longer term view.
The president also used the speech to give his first on-camera reaction to the deaths over the weekend of 22 Navy SEALs and 16 other troops who died when their helicopter crashed in eastern Afghanistan. “Their loss,” he said somberly, “is a stark reminder of the risks that our men and women in uniform take every single day on behalf of their country. Day after day, night after night, they carry out missions like this in the face of enemy fire and grave danger."
For Obama, the appearance in the State Dining Room called for him to fill two critical presidential roles: mourner-in-chief, recalling the bravery and sacrifices of those who perished in war; and calmer-in-chief, assuring investors and consumers who have been battered by so much bad news.
It is a measure of how fast the current crisis is moving that it seems like a long time ago that the president talked about the economy. But it was just Friday when he went to the Washington Navy Yard and sought to reassure investors. “We are going to get through this. Things will get better,” he said then. The president at the time avoided any direct comment on the Dow’s precipitous decline of the day before when it lost more than 500 points.
On Monday, with the Dow still plunging, the president hit the same message again but with just a little more fervor.
As he did on Friday, he acknowledged that Washington has to take most of the blame for the ratings downgrade and the skepticism of the American people. “We didn't 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,” he said. “We knew from the outset that a prolonged debate over the debt ceiling, and where the default was a bargaining chip, could do damage to the economy.”
He said S&P acted “not so much because they doubt our ability to pay our debt if we make good decisions. But, after witnessing a month of wrangling over raising the debt ceiling, they doubted our political system's ability to act.”
Obama tried to balance talking up the country’s fundamental economic health with the need to address real debt problems. The world’s investors, he argued, understand that the United States deserves “a quadruple A” rating if there were such a thing. But he quickly added, “That does not mean we don't have a problem.”
“The fact is that 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,” the president said.
Debt, he acknowledged, is “a legitimate cause of concern.” But he said the “good news” is that “we know that the problems are eminently solvable and we know what to do.” As he has since the beginning of the debt debate, Obama said the path out of debt takes the country past last week’s agreement and take two more steps: “Tax reform that will ask those who can afford it to pay their fair share and modest adjustments to health care programs like Medicare.”
The president asserted all that is needed are “common sense and compromise.” And he pledged to both put out his own plan soon and to work with the congressional “super committee” that has been charged with coming up with a long-term solution.
“It is not a lack of plans or policies that is the problem here,” Obama said. “It is a lack of political will in Washington. It is the insistence on drawing lines in the sand. Refusal to put what is best for the country ahead of self-interest, or party, or ideology, and that is what we need to change.”
The president did not mention one development that had roiled the markets earlier in the day: S&P’s decision to lower the ratings of mortgage-finance firms Fannie Mae and Freddie Mac.
The president’s challenge was daunting -- and not just because of the numbers on Wall Street. A new CNN/ORC International Poll, released on Monday, indicated the concern is also deepening on Main Street. For the first time in Obama’s presidency, a majority of Americans thinks the U.S. economy “is still in a downturn and conditions are going to worsen.”
The pessimism is up sharply since mid-April when a poll found 36 percent of Americans expected the economy to worsen. That number is now up to 60 percent. The poll was conducted Friday through Sunday.