"We didn't need a rating agency to tell us that the gridlock in Washington over the last several months has not been constructive, to say the least,"

Barack Obama

Obama says credit downgrade means 'renewed sense of urgency'

WASHINGTON — President Obama plans to recommend additional ways to reduce federal budget deficits following Standard & Poor's downgrading of U.S. credit — an action he said should "give us a renewed sense of urgency."

In his first remarks on the unprecedented downgrade since Friday, when the ratings agency moved the nation from AAA to AA+, Obama said it would be wrong to overreact either to plummeting financial markets or the S&P action.

"We didn't need a rating agency to tell us that the gridlock in Washington over the last several months has not been constructive, to say the least," Obama said.

Obama said analysts "doubted our political system's ability to act," and he called again for Congress to respond with a deficit-reduction plan that includes taxes as well as budget cuts. A committee to be created next week will have three months to devise a plan cutting at least $1.5 trillion over 10 years.

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That was immediately rebuffed by House and Senate Republican leaders — yet another sign that the grand compromise S&P yearns for will be tough to reach. House Majority Leader Eric Cantor released a memo to all House Republicans arguing that despite the S&P downgrade, they must hang tough against tax increases in the fall and take the issue to voters in 2012.

"There will be pressure to compromise on tax increases. We will be told that there is no other way forward. I respectfully disagree," Cantor said.

Senate Republican leader Mitch McConnell also said the new congressional committee should focus on cutting entitlement programs, such as Medicare and Medicaid. "I disagree with the president's call for tax hikes on American families and job creators," he said.

The president didn't give any hints about his upcoming recommendations, but White House press secretary Jay Carney indicated they would be similar to those he made during the recent negotiations over raising the nation's $14.3 trillion debt limit.

At the time, Obama said he was willing to consider changes to Medicare, including raising the age of eligibility from 65 to 67, if Republicans would agree to higher taxes on people with income above $200,000.

"We are not reinventing the wheel here," Carney said. "A lot of specifics about our approach to this are already well known."

Obama's decision to address the issue from the White House after spending the weekend at Camp David did nothing to calm jittery financial markets. The Dow Jones industrial average continued to slide, closing down more than 600 points on the day. The president said the U.S. financial system remains strong and will get stronger with a "balanced" deficit reduction plan that asks wealthy Americans to pay their fair share. "Our problems are eminently solvable," he said.

The problem isn't a "lack of plans," Obama said

The S&P downgrade criticized the debt-ceiling deal reached last week by Obama and Congress. It calls for more than $900 billion in spending cuts over 10 years and another $1.5 trillion to be determined by the special committee. If the latter cuts don't materialize, $1.2 trillion would be cut automatically over a decade from defense and domestic programs.

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