Barack Obama defends US credit

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US President Barack Obama vowed on Monday that America would always be a ‘triple A country,’ fiercely defending US credit after a historic debt downgrade and saying the economy could be fixed with political will.

Speaking against a backdrop of tumbling global stockmarkets, Obama said he would present his own solutions for mending US debt woes in ‘coming weeks’ but again called on Republicans to accept tax hikes on the richest Americans.

As he spoke jittery markets sent the Dow Jones Industrial Average plummeting to 4.5 percent, sinking below the 11,000 points level. The broader S&P 500 lost 5.7 percent, while the tech-heavy Nasdaq Composite plunged 5.6 percent.

The president was making his first public comments on the historic decision by ratings agency Standard & Poor's on Friday to downgrade the AAA credit rating on US sovereign debt for the first time to AA+ with a negative outlook.

"No matter what some agency may say, we have always been and always will be a triple A country," Obama said, arguing global investors still saw the US economy as one of the safest investments in the world.

But he conceded that fiercely partisan combat in Washington was hampering efforts to fix the US economy, and called on all sides to unite on a balanced solution to ease the deficit tipped to hit 1.6 trillion dollars this year.

"Here's the good news. Our problems are imminently solvable. And we know what we have to do to solve them," Obama said at the White House.

The president said the solution to US deficit woes was a mixture of tax rises on the most affluent Americans and modest cuts to state-run health programs plagued by rising costs, like Medicare for the elderly.

"Making these reforms doesn't require any radical steps. What it does require is common sense and compromise," Obama said.

The formula was a failed part of an Obama push for a ‘grand bargain’ during the fierce debate over raising the US government's borrowing authority which wrapped up last week.

Republicans refuse to countenance any kind of tax rises and Obama's Democratic allies have balked at any cuts to Medicare or other aspects of the American social safety net.

"It's not a lack of plans or policies that is the problem here. It's a lack of political will in Washington," Obama said. "It's the insistence on drawing lines in the sand, a refusal to put what's best for the country ahead of self-interest or party of ideology. And that's what we need to change."