BUSINESS

U.S. debt downgraded by rating agency S&P

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WASHINGTON (AP) — After the first-ever down grade of the nation's credit rating, the White House says President Barack Obama thinks it's clear Washington "must do better" in tackling the deficit.

Traders have worked through a tumultous week, ending with the first credit downgrade in U.S. history. (Photo: Associated Press)

The statement from his spokesman, Jay Carney, didn't directly refer to Friday's move by Standard & Poor's to lower its AAA credit rating for the U.S. government. But it said the talks that led to this week's deal on hiking the borrowing limit "took too long" and were "at times too divisive."

The deal mandated $1 trillion in deficit cuts over 10 years, and set up a special committee of Congress find over $1 trillion more. Carney said Obama will press that committee to put the nation's interests over "political and ideological" divides.

Meanwhile, Republicans and Democrats quickly doled out blame to each other for the downgrade in the nation's sterling credit rating, an expected but unsettling move that further clouds prospects for the recovery of the fragile U.S. economy.

The back and forth came after Standard & Poor's, one of the world's three major credit rating agencies, cited "difficulties in bridging the gulf between political parties" as a major reason for the downgrade from U.S.'s top shelf AAA status to AA+, the next level down. The rating agency has essentially lost faith in Washington's ability to work together to address its debt.

The downgrade, hours after markets closed on Friday, is a first for the United States since it was granted an AAA rating in 1917. S&P warned about a downgrade as far back as April. Its decision came just four days after fractious debate over raising the nation's debt ceiling ended in a compromise that would reduce the country's debt by more than $2 trillion. S&P said Friday the cuts did not go far enough.

Both political parties used S&P's report to buffet their policy cases and attack the other side.

House Speaker John Boehner, R-Ohio, said he hoped the downgrade served as a wake-up call to the Democratic Party.

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