President Barack Obama begins a tour promoting his proposal to cut long-term budget deficits with a new urgency after Standard & Poor’s warned that the nation’s AAA credit rating is in peril.
Obama is scheduled to spend three days traveling through states crucial to his 2012 re-election campaign to publicize his plan to reduce cumulative deficits by $4 trillion over 12 years. The plan includes spending cuts on defense and domestic programs and calls for raising taxes on the wealthy.
He will hold town-hall meetings at 10:15 a.m. today in Annandale, Virginia, and later in the week at Facebook Inc.’s headquarters in Palo Alto, California, and in Reno, Nevada.
S&P said the government risks losing its AAA credit rating unless policy makers agree on a plan by 2013 to reduce budget deficits and the national debt. The New York-based company maintained its top rating on U.S. long-term debt while lowering the outlook to “negative” for the first time.
The White House downplayed the negative outlook, saying it was based on a faulty appraisal of the political climate.
The announcement was the first time the U.S. credit outlook has been questioned since 1995 and 1996, when a dispute between Clinton and House Speaker Newt Gingrich, a Georgia Republican, led to two government shutdowns. Fitch Ratings put U.S. debt on a “negative ratings watch” in November 1995 until spring 1996, and Moody’s Investors Service put some U.S. government bonds on review for a possible downgrade in January 1996.