Jay Carney is taking issue with the political analysis from Standard & Poor. S&P steps on W.H. sales pitch

President Barack Obama opens a three-day campaign Tuesday to sell voters on his deficit-cutting plan — his first sustained attempt at explaining why the country may need to accept higher taxes and fewer government benefits.

But even before he began his push, the White House had to deal with the repercussions of a Wall Street rating firm’s skepticism that Obama and congressional Republicans can ever reach an agreement on the deficit. The report by Standard & Poor’s downgrading the United States’s credit outlook to negative resulted in the stock market declining by 140 points.


White House press secretary Jay Carney took issue with the political analysis from S&P, telling reporters that “the political process will outperform” the rating agency’s expectations.

“The president is committed, as he made clear in his speech Wednesday, to moving forward in a bipartisan way to reach common ground on this important issue of fiscal reform. And he believes that the fact that he and Republicans agree on a target of $4 trillion in deficit reduction over 10 to 12 years is an enormously positive development. They also agree the problem exists.”

“The third part is the hard part, which is reaching a bipartisan agreement, but two out of the three is important, and it demonstrates progress,” Carney said.

The S&P warning, however, served as a stark reminder that, unlike negotiations over a health care or education bill, the daily ups and downs of the fiscal talks will sway markets, not simply vote counts on the Hill.

After months of cajoling by lawmakers to elevate the deficit-reduction debate, Obama will try to lay out the case for voters — a task that rivals his push for health care reform in terms of complexity and challenge. He will conduct three town hall meetings, starting Tuesday in Annandale, Va., followed by Palo Alto, Calif., where he will speak at Facebook headquarters Wednesday, and Reno, Nev., on Thursday.

Aides say the president’s aim for the tour, which includes stops in two key swing states, is to explain why the debate in Washington matters to the average voter.

“This can be extremely arcane and esoteric stuff when Americans out there are worrying principally about the economy and job creation and gas prices,” Carney said. “He wants to explain why, for the sake of our economy, we need to move forward on fiscal reform, shared responsibility and share the burden going forward.”

The president’s challenge is significant. A majority of voters support the goal of reducing the deficit and the debt but oppose the proposals under consideration, such as eliminating popular tax breaks for mortgage interest and charitable contributions or making major changes to Medicare.

On Monday, both sides seemed to have hardened their positions — only bolstering S&P’s pessimism that cooler heads will eventually prevail for the sake of the economy.

Carney continued to reject the idea that a debt ceiling vote should be raised in conjunction with spending constraints. And Republicans jumped on the news to bolster their case for raising the debt limit, only with a serious deficit reduction plan, and spending cuts attached.

House Majority Leader Eric Cantor (R-Va.) said in a statement that the report was a “wake-up call to those in Washington asking Congress to blindly increase the debt limit.”

“Today’s announcement makes clear that the debt limit increase proposed by the Obama administration must be accompanied by meaningful fiscal reforms that immediately reduce federal spending and stop our nation from digging itself further into debt,” Cantor said in a statement. “For decades, Washington has blindly increased the debt limit while doing little to stop spending money that it doesn’t have — a dangerous pattern that must end.”

Rep. Peter Welch (D-Vt.) released a letter signed by 114 House Democrats opposing Republican demands to tie the debt limit increase to spending reductions. He pointed to Monday’s stock market decline as proof that Republicans would put the country at risk if they insist on a conditional debt vote.

“I hope Majority Leader Cantor and those in Congress seizing upon debt ceiling pressure as a ‘leverage opportunity’ are listening to the markets today and thinking twice about their risky strategy,” Welch said in a statement. “The markets have doubts about America’s ability to get its fiscal house in order. And they are right. If Mr. Cantor persists in playing politics with the debt limit, he will be held accountable for unleashing the financial hounds of hell.”

In an effort to allay fears that S&P’s judgment will weaken global confidence in the U.S. economy, White House officials dismissed the pessimistic assessment of the political prospects for the deal. Instead, they highlighted the economic analysis in the report, which described the U.S. economy as “high-income, highly diversified and flexible.”

“What the S&P is doing is making a political judgment, and it is one that we don’t agree with,” top White House economist Austan Goolsbee said on CNBC.

When it comes to politics, Carney said, the White House knows better than S&P or the financial markets about what is possible in Washington.

But the market appeared to disagree. Stocks took a turn for the worse shortly after the market opened Monday morning, bringing down Wall Street indexes more than 1.5 percent.

Asked whether a bipartisan agreement is still possible, Carney said: “We believe it is. And we rest our faith in that.”