Top economic voices question US downgrade

August 8th, 2011 - 1:54 pm ICT by IANS  

Barack Obama Washington, Aug 8 (IANS) Leading economic experts from Democratic and Republican parties alike have voiced outrage over Standard & Poor’s downgrade of the US credit rating but disagreed on whom to put the blame.

Steve Forbes, CEO of Forbes, Inc. and a former Republican presidential candidate called S&P;’s downgrade from AAA to AA+ Friday, “an outrageous move” given that the government can still pay the interest and principal on its bonds.

“I’m surprised S&P; would play politics,” Forbes said on CNN Sunday.

Larry Summers, former director of the National Economic Council under President Barack Obama, agreed that the US will pay its debts.

“S&P;’s track record has been terrible and as we’ve seen this weekend its arithmetic is worse,” Summers said on CNN. So there’s nothing good to say about what they’ve done.”

But while Summers placed the blame for the downgrade on House Republicans, who he said “played chicken with America’s credit worthiness”, Forbes defended Congressional Republicans, who he said were elected to “undo the fiscal damage” of the Obama administration.

Outgoing White House economic adviser Austan Goolsbee alleged S&P;’s credit downgrade was based on “questionable mathematics.”

“They made a $2 trillion math error, and they didn’t check their work,” he said on NBC referring to the White House claim that S&P; had overstated US debt estimate by $2 trillion.

Goolsbee also called for policymakers to focus not just on the deficit but also on longer-term proposals aimed at boosting job creation and lowering the nation’s 9.1 percent unemployment rate.

Former Federal Reserve Chairman Alan Greenspan acknowledged that S&P;’s downgrade “hit the self esteem of the United States” but said US Treasury bonds are still a safe investment.

“This is not an issue of credit ratings,” Greenspan said. “The US can pay any debt it has because we can always print money to do that. So, there is zero probability of default.”

(Arun Kumar can be contacted at

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