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Obama: If debt limit not raised, financial crisis possible
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President Obama departs aboard Air Force One at the Miami International Airport in Florida for Puerto Rico, June 14, 2011.
Credit: Reuters/Larry Downing
WASHINGTON |
WASHINGTON (Reuters) - President Barack Obama warned on Tuesday there could be another global financial crisis if Congress failed to raise the national debt ceiling.
But in an interview with NBC's "Today" show, Obama also said he took Republican leaders at their word that they want to avoid such a situation and he expects a deal to increase the debt limit "in a sensible way."
"The full faith and credit of the United States is the underpinning not only of our way of life, it's also the underpinning of a global financial system. We could actually have a reprise of a financial crisis, if we play this too close to the line. So we're going be working hard over the next month," he said.
(Reporting by Matt Spetalnick; Editing by Doina Chiacu)
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The debt limit was never meant to be used in this way. It was instituted as a way of allowing Congress to exert overall budgetary oversight without having to approve every nickel and dime spent via a separate bill. In the future, when we have a larger number of reasonable folks in Congress, I hope that the debt limit process will be changed. It would make more sense to institute a standing 5 or 10 percent increase in the limit every time it is reach with Congress having the right to cut the increase. Cutting the increase below the amount that would provide enough money for the country to pay its debts for the next 12 months should require a 2/3 vote. That would be a reasonable limit that would not put our economy in jeapardy.
Perhaps there are some Republicans who actually think that it is our deficit that impeding the recovery but I doubt that very many of them actually believe that. Most of them probably recognize that we need an additional economic stimulus but they must hope that they can ruin the recovery just enough to regain power and then they can switch gears and get the credit for the eventual improvement. This is a very dangerous game to play.
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