Romney: S&P downgrade due to Obama failure

CONCORD, N.H. – Republican presidential candidate Mitt Romney said this morning that Standard & Poor’s downgrade of the US credit stemmed from a “failure of leadership’’ by President Obama.

“Our national balance sheet is not right. That’s what Standard and Poor’s recognized and we should take appropriate action to correct that,’’ Romney told reporters, speaking before a business roundtable with the Greater Concord Chamber of Commerce.

S&P downgraded its rating for the country’s debt on Friday from AAA to AA+, the first reduction in US history. The agency said a debt reduction plan Congress passed last week did not do enough to address the country’s debt situation.


Treasury Secretary Timothy Geithner criticized S&P over the weekend, saying the downgrade showed a lack of knowledge of the US economy. But Romney said that critique showed the Obama administration would substitute Harry Truman’s motto, “The buck stops here,’’ with a new one: “The buck stops somewhere else.’’

S&P noted that its downgrade was partly attributable to its belief Bush-era tax cuts will now not expire at the end of next year, depriving the Treasury of fresh revenue.

“We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the [debt ceiling] act,’’ the agency wrote.

Asked whether Republican House leaders, or those aligned with the Tea Party, shared blame for the difficulty in reaching a debt agreement, Romney said the president should have shown leadership over the last three years that would have allowed him to work with both parties and make Medicare, Medicaid, and Social Security financial sustainable.

Asked, conversely, whether he blamed the president entirely for the situation, Romney said, “No, I don’t think it’s simply the president’s fault.’’

Romney said Republicans and Democrats have both spent too much over the last two decades. But, he said, “During the last two-and-a-half years, this president is primarily responsible for the failure of this economy to reignite, for his own failure to take action so obviously needed to restore our balance sheets.’’


Romney said when he was governor of Massachusetts, he reduced spending and worked with the Democratic-controlled Legislature to lower the state’s unemployment rate. As a result, he said, “We had a credit upgrade (from the S&P) as proposed to what you’re seeing now, a downgrade.’’

Romney addressed Massachusetts’ potential budget deficit in part by raising fees and taxes – something he has opposed on a national level.

What the S&P was reacting to nationally, Romney said, was a growing debt in the future, if America can’t control its spending, particularly on entitlements.

“(S&P is) seeing America has to reign in excessive spending not just this year but over a long period of time,’’ Romney said.

When a voter at a Manchester Rotary Club lunch asked Romney what he would have done differently than the president during the debt ceiling debate, Romney did not mention specific policies, but talked generally about bipartisanship, entitlement reform, and economic growth.

Romney said he would have worked with both parties from the beginning – as he did as Massachusetts governor. Romney said Obama, rather than attacking Republicans, should have worked with the GOP to reduce the cost of unfunded liabilities for entitlement programs.


“The right answer is to cut the level of spending, bring the level down of unfunded liabilities down the road, and get the economy going,’’ Romney said.

Romney opposed the ultimate debt ceiling compromise, saying it would open the door to defense spending cuts and potential tax increases. He continued to maintain that his solution would have been a “cut, cap and balance’’ approach, which included immediate spending cuts, a federal spending cap, and passage of a balanced budget amendment.

“My position was clear: cut, cap, and balance was the right way for America to deal with this financial distress,’’ said Romney, refuting criticism he withheld his position at the height of the debate.

Romney’s attempt to blame Obama for the S&P downgrade drew fire from New Hampshire Democratic Party Chairman Ray Buckley, who said the fault lies with activists from the Tea Party movement who resisted a compromise.

“The real problem we have here are the Tea Party activists who are insisting their supporters in Congress essentially rip the government down and push the economy off the ledge, which Romney endorsed,’’ Buckley said in an interview. “Romney endorsed voting no and putting America into default.’’

Several voters placed blame on both sides of the aisle.

Jerry Little, president of the New Hampshire Bankers Association, said he questions whether S&P had to downgrade the debt as quickly as it did. But he said he believes the problem lies with not only with Obama, but with both political parties and their inability to come together.


“We need to get past partisanship and find a bipartisan solution, a willingness to compromise,’’ Little said.

Similarly, Donna Ehrler, senior vice president of Northway Bank, said she is concerned that borrowing rates will rise because of the downgrade, as the country tries to recover from the recession – and she too blames partisanship in both parties.

“There’s a lot of blame to go around,’’ she said.


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