Reuters logo
UPDATE 2-Obama warns will not 'play' games over debt ceiling
December 5, 2012 / 5:05 PM / 5 years ago

UPDATE 2-Obama warns will not 'play' games over debt ceiling

* “I will not play that game,” Obama on debt ceiling dispute

* Obama says numbers are not that far apart

* Calls global economy “soft”

By Jeff Mason and Mark Felsenthal

WASHINGTON, Dec 5 (Reuters) - President Barack Obama bluntly warned Republican lawmakers on Wednesday that he would not engage in another debt ceiling standoff and predicted a “fiscal cliff” deal could be reached in a week if his opponents would compromise on taxes.

Obama, speaking to the Business Roundtable group of chief executives, said any suggestion that Republicans would have more leverage next year to extract concessions from the White House by threatening to let the United States default was a “bad strategy” for them and for the country.

A standoff between the White House and congressional Republicans in 2011 brought the country perilously close to defaulting on its debt and resulted in an embarrassing debt rating downgrade for the United States.

“I want to send a very clear message to people here: We are not going to play that game next year,” Obama told the CEOs.

“If Congress in any way suggests that they’re going to tie negotiations to debt ceiling votes and take us to the brink of default once again as part of a budget negotiation -- which, by the way, we had never done in our history until we did it last year -- I will not play that game. Because we’ve got to break that habit before it starts.”

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 sometime 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.

The White House wants an agreement to raise the debt ceiling to be part of a deal to avoid the “fiscal cliff” of spending cuts and tax hikes that start to take effect in January.

Obama insists that tax rates be raised on the wealthiest Americans as part of a deal to avoid the cliff. He won re-election last month largely on a pledge to raise those rates. Republicans say raising taxes on the wealthiest would hurt a still weak U.S. economy, and the two sides are at a stalemate over how to proceed.


Obama said he and Republican leaders in Congress were not that far apart and could reach a deal in roughly a week if they would accept a tax rate rise.

“We’ve seen some movement over the last several days among some Republicans. I think there’s a recognition that maybe they can accept some rate increases as long as it’s combined with serious entitlement reform and additional spending cuts,” he said.

“If we can get the leadership on the Republican side to take that framework, to acknowledge that reality, then the numbers actually aren’t that far apart. Another way of putting this is we can probably solve this in about a week; it’s not that tough, but we need that conceptual breakthrough that says we need to do a balanced plan.”

Failure to reach a deal could push the U.S. economy back into recession.

Obama said the global economy was soft, Europe would be “in the doldrums for quite some time,” and Asia was not “charging forward” as quickly as it was a few years ago.

“Everybody is looking to America because they understand that if we’re able to put forward a long-term agenda for growth and prosperity that’s broad-based here in the United States, that confidence will not just increase here in the United States, it will increase globally,” he said.

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below