"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," he said in a statement.
In its report, S&P analysts based the decision on the inability of lawmakers to develop a consensus plan to "reverse recent fiscal deterioration or address longer-term fiscal pressures." The chasm between plans unveiled by Republicans and President Obama this month added to the agency's doubts.
But the Obama administration cast it as a political decision and expressed confidence that the agency's pessimism was unfounded.
"We think that the political process will outperform S&P expectations," press secretary Jay Carney told reporters Monday. "The president is committed, as he made clear in his speech on Wednesday, to moving forward in a bipartisan way to reach common ground on this important issue of fiscal reform."
Seeking to reassure the markets which quickly tumbled in Monday trading, the Treasury Department also pointed to the analysis from Moody's, which hailed "the changed parameters of the debate" in Washington as "a turning point that is positive for the long-term fiscal position of the U.S. federal government."
Monday's announcement only served to jump start the fierce battle over the nation's finances continues even as lawmakers have left Washington for a two-week spring recess.
President Obama plans to make the case for his plan in a series of town hall-style meetings in Virginia, Nevada and California this week. House Minority Leader Nancy Pelosi was appearing in Florida Monday, arguing to seniors that the party would "Save Medicare" by rejecting the Republican proposal offered by House Budget Committee Chair Paul Ryan (R-Wisc.).
House Speaker John Boehner (R-Ohio) was leading a Congressional delegation overseas, with stops in Iraq and Pakistan. House Majority Whip Kevin McCarthy (R-Calif.) said the plan Obama will be selling to voters this week "is the wrong path forward for our country" because it would "lock in spending at historically high levels and raise taxes by trillions."