The United States is prepared to take the steps needed to reduce its ballooning budget deficits and both political parties agree now is the time to act, a top Obama administration official said on Monday.
"We believe S&P's negative outlook underestimates the ability of America's leaders to come together to address the difficult fiscal challenges facing the nation," said Mary Miller, Assistant Treasury Secretary for Financial Markets.
Standard & Poor's Monday downgraded the outlook for the United States to negative, saying it believes there's a risk U.S. policymakers may not reach agreement on how to address the country's long-term fiscal pressures.
"Because the U.S. has, relative to its 'AAA' peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable," S&P said.
Miller noted that rival ratings firm Moody's Monday said the recent attention that Washington politicians are paying to the U.S. fiscal situation "is positive for the long-term fiscal position of the U.S. federal government."
The administration also stressed that S&P did not cut the 'AAA/A-1+' ratings for the United States.
Prices for U.S. 30-year bonds fell sharply on the outlook revision, while the dollar trimmed gains against the euro and hit session lows against the yen. U.S. stocks dropped sharply at the open. The Standard and Poor's 500 index was down about 1.6 percent after a half hour of trade.
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