By downgrading the credit rating of the United States from AAA to AA+, credit ratings agency Standard and Poor's has shown really terrible judgement and have handled themselves very poorly, US Treasury Secretary Timothy Geithner has said.
"I think S&P has shown really terrible judgment and they've handled themselves very poorly. And they've shown a stunning lack of knowledge about basic US fiscal budget math. And I think they drew exactly the wrong conclusion from this budget agreement," Geithner told news channel NBC/CNBC in an exclusive interview.
"They, like many people, looked at this terrible debate we've had over the past few months, should the US default or not, really a remarkable thing for a country like the United States. And that was very damaging," he said.
"I think it left people to wonder whether this political system was going to be up to the challenges facing the country. It caused a lot of damage and that's going to take a long time to heal that damage," said Geithner, who has decided to stay in the Obama Cabinet a little longer after earlier expressing his intention to leave the post this summer.
"I think if a President asks you to serve, you have to do it. And we have men and women dying to protect the country in Afghanistan. We have unemployment above 9 per cent. Still trying to heal the scars of this crisis. We have a lot of work to do," Geithner said, explaining the reasons for his decision to stay in Cabinet for now.
Geithner argued that despite the downgrade of America's credit rating, US treasuries are as safe as they have always been.
"The judgement by S&P changed nothing. It added nothing to what people know about this country. Again, there's no risk the US would never meet its obligations. We've got some challenges ahead of us, but we'll be able to work with those challenges. We'll get through this," he said.
Geithner said the US Congress ultimately owns the credit rating of the United States.
They have the power of the purse on the Constitution.
"They're going to have a chance now to earn back the confidence of investors around the world. Of course they're going to have to do that.
"But if you look at this country and you look at this economy, our country is much stronger than Washington. We have a very resilient economy. We're a very strong country. And I have enormous confidence in the basic regenerative capacity of the American economy and the American people," he said.
"We're growing. We're still healing. We're not growing as fast as we'd like, but we have absolutely every capacity to meet our obligations. There is no risk the United States of America would ever not be in a position to meet its obligations," Geithner said.
"But we have a lot of work to do and, you know, when these leaders return from vacation, they're going to have to get back to work in trying to put together the kind of long-term fiscal reforms to demonstrate we can live within our means and take some additional actions to help strengthen this economy," he said.
