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Biden Slams S&P for Downgrade that Hurt Economy

Friday, 26 August 2011 11:04 AM

Vice President Joe Biden said that Standard & Poor’s decision to replace their president may have been the result of ‘a lot of pressure from a lot of places,’ including from U.S. businesses that suffered as a result of the first-ever downgrade of U.S. debt.

“There were probably an awful lot of businesses out there going, ‘what the hell did you guys do?’” Biden said in an interview with reporters on board Air Force Two on the way to his home in Wilmington, Delaware, after a nine-day trip to China, Mongolia and Japan.

Biden said the downgrade “rebounded back to impacting on Wall Street and impacting on American business.”

Biden said he didn’t know the internal politics that led to the leadership change within the ratings company and he said he thinks pressure didn’t come from the government.

“It’s not like we are in a position where American industry is cash-starved, where there’s no capital available,” he said. “It’s about getting to the point where consumers start to purchase. And that requires that they be more confident about the job environment and the pay scale environment changing.”

On Aug. 22 S&P’s parent McGraw-Hill Co. said in an e-mailed statement that Douglas Peterson, 53, Citibank NA’s chief operating officer, is taking over as president of S&P from Deven Sharma, 55, who will leave at the end of the year to “pursue other opportunities.” Peterson, 53, will start Sept. 12 and Sharma will work on the company’s strategic review in the meantime.

Biden said that he agrees with Treasury Secretary Tim Geithner, calling the rating agency’s decision to downgrade U.S. debt a “bad judgment.”

Biden’s trip to China, the largest foreign holder of U.S. debt, came less than two weeks after S&P’s Aug. 5 announcement that it was downgrading U.S. debt to AA+ from AAA.

Pace of Recovery

The Obama administration is under fire from Republicans in the U.S. over the slow pace of the recovery from the worst recession since the Great Depression and the nation’s long-term deficit.

When asked if there would be new proposals to stimulate job growth in the president’s economic plan expected to be unveiled after Labor Day, Biden said that while he and Obama have “spent a lot of time talking about this,” he wouldn’t comment on the plan’s contents. He said in an Aug. 22 interview that a payroll tax cut for businesses was being considered.

He said since he’s been traveling he hasn’t “seen how it’s progressed” and whether things that he’s “been pushing” for would be included in the final plan.

F-16 Sale

On foreign arms sales, Biden said that a final decision on whether to sell F-16 fighter jets to Taiwan hasn’t yet been made. The deadline is Oct. 1.

Biden said the U.S. “made it clear” the matter won’t be negotiated with Chinese officials.

The more the Chinese cooperate and invest in Taiwan the better, the vice president said.

He said he told the Chinese their relationship with Taiwan is “kind of on an even keel now” and how China handles its relationship with Taiwan affects “how we will respond to the needed commitment to provide for the ability of the Taiwanese to defend themselves.”

Arab Spring

Biden said he had no updates on the situation in Libya though he said he did discuss it with Chinese leaders in the context of the Arab Spring.

He said he told them that although the U.S. supports the pro-democracy movement, “it was spontaneous” and was not “generated by us.” He said it’s clear to the Chinese that “stability in Libya and in the region is in their interest as well.”

Biden said he and Xi talked about Afghanistan and Pakistan and that Xi wanted to talk more about those issues when they next meet.

Biden said Xi wanted to know what Biden thought of Pakistan’s stability and “their relationship with civilian power to military power.”

“We both mused about the degree to which, what portion of the population has been radicalized. I still think it’s a minority portion of the population, but it’s real,” Biden said, adding that the Chinese are concerned about radical Islam, especially in their most western provinces.

“With the exception of al-Qaeda there is really no, very little, existential threat to the United States from radical Islam,” Biden said in the interview.

--With assistance from Katrina Nicholas in Singapore and John Detrixhe in New York. Editors: Robin Meszoly, Jeanne Cummings

To contact the reporter on this story: Kate Andersen Brower on Air Force Two at kandersen7@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

© Copyright 2019 Bloomberg News. All rights reserved.

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Vice President Joe Biden said that Standard Poor s decision to replace their president may have been the result of a lot of pressure from a lot of places, including from U.S. businesses that suffered as a result of the first-ever downgrade of U.S. debt. There were...
Friday, 26 August 2011 11:04 AM
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