WASHINGTON, April 18 (Xinhua) -- The U.S. Treasury Department asserted Monday that the negative credit outlook of Standard and Poor's (S&P) belittled the ability of U.S. leaders to address the difficult fiscal challenges facing the nation, but economists held that the surging public debt would continue to be a grave uncertainty overhang for the world's largest economy.
"This morning, S&P affirmed the AAA rating of the United States, but emphasized the importance of timely bipartisan cooperation and action on fiscal reform," Mary Miller, Assistant Secretary for Financial Markets, said in a statement.
S&P has lowered the long-term U.S. credit outlook from "Stable" to "Negative". It reaffirmed its investment-grade credit ratings on the U.S. short and long-term debt, but said the ratings were at risk in coming years due to spiking deficit and public debt.
Miller contended that as President Barack Obama said last week the current fiscal situation was "well within our capacity as a country", and the administration had initiated a bipartisan process to make headway on restoring fiscal responsibility.
U.S. Treasury Secretary Timothy Geithner Sunday expressed confidence that Congress will raise the nation's borrowing cap in the near term.
"I want to make it perfectly clear that Congress will raise the debt ceiling," Geithner told the ABC television in an interview, adding that Republicans told this to President Barack Obama on Wednesday in the White House.
The United States is going to reach the current debt limit of 14.3 trillion U.S. dollars no later than May 16 this year. Defaulting on legal obligations of the nation would trigger a financial crisis potentially more severe than the crisis from which the nation is only now starting to recover, Geithner said on April 4 in a letter to Congress, depicting a gloomy picture of the public debt situation.
"The U.S. economy is strengthening as it emerges from the recent recession. Both political parties now agree that it is time to begin bringing down deficits as a share of gross domestic product (GDP)," Miller added.
Despite the optimism expressed by the administration, increasingly more economists believed that the U.S. soaring debt was unsustainable and the partisan battle over the government budget for the 2012 fiscal year and raising the public debt ceiling would continue.
Raising the debt limit was a "completely ordinary event" for the nation, as it had been raised for 74 times in the last 50 years, said William Gale, a senior fellow at the Brookings Institution.
Gale argued that talk of refusing to raise the debt limit was just blowing smoke on a political stage, but the real question was how to adjust future spending and taxes to bring about future fiscal stability and sanity in a timely manner.