White House, Congress under pressure from S&P move

Lawmakers and the White House seized on Standard & Poor’s revised U.S. credit outlook on Monday as ammunition for each side in the deficit reduction debate, casting doubt on their ability to get a deal soon.

S&P’s move — changing its outlook on the U.S. rating to negative from stable — pushed President Barack Obama and Republicans to agree on ways to slash the deficit or face the potential loss of Washington’s coveted triple-A credit rating.

Stocks fell and policy makers fretted over the move, but neither Democrats nor Republicans signaled a change that would indicate a breakthrough on spending cuts in the near future.

“It drives home the fact that for all the talk in Washington, there is nothing on the table that is moving,” said Sean West, a fiscal policy analyst for investors at the Eurasia Group, referring to the S&P announcement.

Obama and Republican congressional leaders have sparred for weeks over how to tackle the deficit, which is projected to hit $1.4 trillion this fiscal year.

Both sides have unveiled competing plans to bring deficits down to sustainable levels by the end of the decade, but they differ sharply on how to reach those goals.

The White House said Vice President Joe Biden will lead a deficit reduction meeting with members of Congress on May 5, after they return from recess over Passover and Easter.

S&P zeroed in on those differences, saying it saw a risk that Washington would not reach agreement on tackling long-term U.S. fiscal woes by 2013.

“I’m glad they put the warning out,” said Joseph Antos, a scholar at the American Enterprise Institute.


via Reuters.

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