Obama digs heels in, refuses to negotiate debt ceiling

WASHINGTON Mon Jan 14, 2013 6:12pm EST

U.S. President Barack Obama takes questions from reporters during a news conference at the White House in Washington, January 14, 2013. REUTERS/Jonathan Ernst

U.S. President Barack Obama takes questions from reporters during a news conference at the White House in Washington, January 14, 2013.

Credit: Reuters/Jonathan Ernst

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WASHINGTON (Reuters) - President Barack Obama on Monday rejected any negotiations with Republicans over raising the nation's borrowing limit, accusing his opponents of trying to extract a ransom for not ruining the U.S. economy in the latest fiscal fight.

Calling a White House news conference to promote his position on the budget, Obama vowed not to trade cuts in government spending sought by Republicans in exchange for raising the borrowing limit.

"What I will not do is to have that negotiation with a gun at the head of the American people," he said.

With an agreement to prevent the "fiscal cliff" barely two weeks old, Washington has already begun skirmishing over a new fiscal issue: the debt ceiling, which fixes a limit on how much the government can borrow.

The United States could default on its debt if Congress does not increase the borrowing limit. Obama has tangled repeatedly with Congress over budget and spending issues, and on Monday he said Republicans would bear the responsibility for the consequences of a default.

"They can act responsibly, and pay America's bills or they can act irresponsibly, and put America through another economic crisis," he said. "But they will not collect a ransom in exchange for not crashing the American economy."

Republicans want Obama to cut some government spending to rein in the deficit before they agree to raise the debt limit again.

Obama must get "serious about spending and the debt limit is the perfect time for it," Senate Republican leader Mitch McConnell said. "The American people do not support raising the debt ceiling without reducing government spending at the same time," said Republican John Boehner, the House of Representatives speaker.

The last debt ceiling fight, in 2011, upset world financial markets. Obama cast the borrowing issue on Monday as one that will affect many Americans and sensitive industries.

"If congressional Republicans refuse to pay America's bills on time, Social Security checks and veterans' benefits will be delayed. We might not be able to pay our troops, or honor our contracts with small business owners. Food inspectors, air traffic controllers, specialists who track down loose nuclear material wouldn't get their paychecks," he said.

Obama reminded Republicans than he won the November election partly on his approach to fiscal issues.

The debt limit is one of a trio of deadlines looming around the end of February, including automatic deep spending cuts that were temporarily put off in the fiscal cliff deal, and the end of a stopgap government funding measure.

A number of Republicans have said they would be willing to allow a U.S. debt default or a government shutdown to force the Obama administration to accept deeper spending cuts than the White House would like.

Obama's unexpected news conference could have been a pre-emptive strike aimed at influencing strategy sessions among Republican lawmakers scheduled for later this week.

The Treasury Department warned on Monday that the United States will run out of ways to prevent a default in mid-February or early March if the $16.4 trillion ceiling on borrowing is not raised.

NOT A "DEADBEAT NATION"

Obama said he would agree to talk about steps to trim the U.S. budget deficit, but made clear he wants to keep that discussion separate from the debt ceiling increase.

"The issue here is whether or not America pays its bills," he said. "We are not a deadbeat nation. And so there's a very simple solution to this: Congress authorizes us to pay our bills."

He held to his position that deficit reduction should include measures to raise revenue and not come from spending cuts alone.

Republicans have rejected that approach, saying the fiscal cliff deal, which raised taxes for the wealthy while maintaining low tax rates for most Americans, should have put to rest any more discussion over tax increases.

Fiscal issues loomed large during the final news conference of Obama's first term, which came a week before an inauguration ceremony that will launch his next four years. Fights with Congress over taxes and spending have overshadowed much of his domestic agenda over most of the last two years, with the president facing legislative gridlock that shows little sign of abating.

Obama raised the specter of a severe setback to the U.S. economy if congressional Republicans persist with the threat of a debt default.

"It would be a self-inflicted wound on the economy," he said. "Even entertaining the idea of this happening, of the United States of America not paying its bills, is irresponsible. It's absurd."

(Additional reporting by Matt Spetalnick, Jeff Mason and Steve Holland, Editing by Alistair Bell and Doina Chiacu)

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Comments (139)
catherine888 wrote:
I am confused as to why the republicans in congress are segregated out and blamed for congress’ refusal to lift debt ceiling. Essentially congress as a whole refused to lift the debt ceiling sending a clear message – balance the budget. Take ownership of it or negotiate it now.

This type of blame is very scary.

Jan 14, 2013 12:29pm EST  --  Report as abuse
xyz2055 wrote:
If Congress doesn’t act responsibly on this matter..then Obama has no choice but to raise the Debt Ceiling by Executive Order.

Jan 14, 2013 12:40pm EST  --  Report as abuse
SanPa wrote:
The problem is that we’re damned if they do and damned if they don’t raise the debt ceiling. Revenue growth was stymied by tax cuts during the early 21st Century, without growth benefits [other than deficit growth]. Off-setting any rise in the debt ceiling with increased corporate tax rates, curtailment of business entitlements, and an end of gratuitous bearing of defense costs for other nations (e.g. 1/4 of Israel’s military operating budget) would be constructive.

Jan 14, 2013 12:45pm EST  --  Report as abuse
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