Obama to stress need to raise debt limit "without drama"

WASHINGTON Wed Dec 5, 2012 6:24am EST

U.S. President Barack Obama speaks to the Nunn-Lugar Cooperative Threat Reduction symposium at the National Defense University in Washington, December 3, 2012. REUTERS/Larry Downing

U.S. President Barack Obama speaks to the Nunn-Lugar Cooperative Threat Reduction symposium at the National Defense University in Washington, December 3, 2012.

Credit: Reuters/Larry Downing

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WASHINGTON (Reuters) - President Barack Obama will renew his case for tax hikes on wealthy Americans to avert a year-end fiscal crunch and call for a smooth increase in the nation's borrowing limit in a speech to a business group on Wednesday, a White House official said.

The president is embarked on an aggressive campaign to pressure congressional Republicans to compromise on steps to avoid the so-called fiscal cliff. He will argue to corporate executives that it would hurt the nation's economy to have another protracted political fight over raising the debt limit, the official said.

"The President will highlight why it would hurt our economy and our nation's businesses if we do not find a solution to avoid another debt ceiling crisis, and will ask the business leaders for their help in supporting an approach that resolves the debt limit without drama or delay," said the official, who spoke on condition of anonymity.

It was the reluctance of congressional Republicans to agree to such an increase in 2011 without deep spending cuts that brought the nation to the brink of default. The result was a historic lowering of the U.S. credit rating and a setback to the recovery from a recession that ended in 2009.

The statutory ceiling on U.S. Treasury borrowing is $16.4 trillion. The nation is expected to hit the legal limit near the year's end, although it can tap emergency measures to stave off a default and keep the government running into early 2013.

If Congress fails to raise the borrowing cap, analysts expect the Treasury would run out of options to avoid a default some time in the latter half of February. That forecast could change depending on how the administration and Congress deal with the fiscal cliff at the end of the year.

Obama is due to deliver remarks to the Business Roundtable, an association representing chief executives of large U.S. firms, at 10:50 a.m. (1550 GMT).

The president and congressional Republicans are currently battling over how to avoid automatic tax increases and deep spending cuts. The president wants to extend expiring tax cuts for all but the wealthiest Americans while Republican leaders are dug in against allowing any taxes rises at all.

The president will renew his insistence that taxes rise on the most affluent Americans in his speech to the business group, the White House official said.

If the administration and lawmaker remain at loggerheads, going over the fiscal cliff is projected to throw the weak economy back into recession.

Obama, re-elected to a second term last month in part on a pledge to raise taxes on the wealthy, has sought to pressure Congress into yielding on tax increases with a stream of meetings with a wide range of interest groups, including businesses, non-profits, and governors of states.

"The president will continue to make the case that our nation's businesses need the certainty that middle class families won't see their taxes go up at the end of the year," he said.

(Reporting By Mark Felsenthal; Editing by Eric Walsh)

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Comments (54)
stambo2001 wrote:
“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a Sign that the US Government cannot pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. …Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here’. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and Grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”


Dec 05, 2012 6:27am EST  --  Report as abuse
minipaws wrote:
IOUSA or WeBeGreece!

Dec 05, 2012 6:46am EST  --  Report as abuse
morbas wrote:
The citizen needs to know the truth about our national budgets, Federal, State and Municipality. Municipal governments consist of county, city, and towns. National attention is focused on federal budget issues; while the federal budget is $2.3Trilllion, the expenditure is $3.8Trillion. Federal plus State plus Municipality is a heavenly $8.06Trillion. The sum total of all Personal Income is $12.98Trillion. (Trillion is 1 Million Million dollars). Thus our governments are operating at 62% of total USA personal income. The taxation rate visible to the citizen is fraction of this, as business taxes are passed on as production costs, as industry must do this to balance their budgets, or go broke. With a centralized Banking System, the federal government can print more money than collected in revenue, the states and municipalities cannot. Taxation at state and municipality is less progressive than federal, which burdens lowest income levels with the highest effective rate; and the upper 2% with the lowest effective rate. Thus, municipalities borrow more in a recession, as the lower quin-tiles wages are more largely diminished. We have municipal city’s falling into bankruptcy. The solution is simple, fairness requires the top quintile pay more taxes. And here in is a mathematical solution. Incomes less than $20,000 (poverty) are not taxed, surtax is used for $20,000 through $200,000money at 30%, and surtax is used for above $200,000 money at 90%. Couples freely share incomes. All other forms of taxation are not allowed, to include business tax. With this taxation method, the citizen tax rate is less than the 2011 federal income tax for incomes less than $250,000. This with the bonus of no state and municipality taxation.
Oh but the gentile aristocracy objects, after all they have invested millions in lobbying to reduce the 1960 91.5% at 400K to the present 15% at infinity, while all lower incomes top rate is 35%. And Norquist, neither elected nor popular has effectively filibustered corrective revenue measures. To the founders of the Constitution he is the sum of all fears. The presidents plan is a small step in the right direction.

Dec 05, 2012 6:48am EST  --  Report as abuse
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