US ‘must do better’ on economy

6 August 2011 Last updated at 12:41 ET

The credit downgrade could raise the cost of borrowing for the US government

The US “must do better” in tackling its pressing economic challenges, the White House says, after a deal on debt was signed into law last week.

Spokesman Jay Carney said the talks on raising the US debt ceiling in order to avoid a default had taken too long and been too divisive.

The statement comes a day after rating agency Standard & Poor’s downgraded the US’ top-notch AAA rating to AA+.

The US uncertainty led to a week of turmoil on the world financial markets.

There were fears that the US could be heading for a double-dip recession and that the sovereign debt crisis in the eurozone could spread to Italy and Spain.

The compromise US debt deal, which was passed in the Senate on Tuesday, raises the debt limit by up to $2.4tn (£1.5tn) from $14.3tn, and makes savings of at least $2.1tn in 10 years.

Mr Carney said the US must now “do better to make clear our nation’s will, capacity and commitment to work together to tackle our major fiscal and economic challenges”.

He said President Barack Obama would now encourage the bipartisan fiscal committee and members of Congress to “put our common commitment to a stronger recovery and a sounder long-term fiscal path above our political and ideological differences”.

The credit rating downgrade, the first in the history of the US, is being seen as a major embarrassment for Mr Obama’s administration and could raise the cost of US government borrowing.

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