President Obama said Republicans were threatening to "blow up the economy" over lifting of the debt ceiling even as some leaders appear to be looking for a way out of the confrontation.
WASHINGTON — With the government just weeks from running out of money to pay its bills, President Obama and prominent Republicans both have started to act as if the White House has the upper hand in the current round of the battle over federal spending.
In recent days, Obama rebuffed suggestions that he consider ways to sidestep the need to raise the limit on the government’s debt, reinforcing his demand for a congressional vote. Monday, he repeated that stand in a hastily announced news conference, lambasting Republicans for threatening to “blow up the economy” and insisting that “no simpler way” exists to deal with the debt ceiling.
Republicans for months have pointed to the moment the nation runs up against the debt ceiling as their point of maximum leverage to force spending cuts, but they now seem increasingly divided.
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Some leaders appear to be looking for a way out of the confrontation, suggesting the party would be wiser to fight Obama over cuts when less is at stake for the economy. Influential GOP strategists are warning that a repeat of the fight they waged in the summer of 2011 could backfire.
Obama on Monday repeated his vow not to negotiate with Republicans on the borrowing limit. The president, who began his first term promising to bridge the party divide, employed unusually vivid language to disparage his GOP adversaries. He called their strategy “absurd” and compared it with putting “a gun at the head of the American people.”
“They can act responsibly and pay America’s bills, or they can act irresponsibly and put America through another economic crisis,” Obama said. “But they will not collect a ransom in exchange for not crashing the American economy.”
Obama, who negotiated spending cuts as part of an agreement to raise the debt limit in 2011, but voted against raising it as a senator in 2006, sought to reframe the debate in terms favorable to his current position.
“Raising the debt ceiling does not authorize us to spend more. All it does is say that America will pay its bills. And we are not a deadbeat nation,” Obama said.
The president laid out a harrowing scenario if the nation suffered “a self-inflicted wound on the economy” and defaulted on its debt. “Social Security checks and veterans’ benefits will be delayed,” he said. “Food inspectors, air traffic controllers, specialists who track down loose nuclear materials wouldn’t get their paychecks. Investors around the world will ask if the United States of America is, in fact, a safe bet. Markets could go haywire.”
Obama got some help Monday from Fed Chairman Ben Bernanke, who compared not raising the debt ceiling with not paying a credit-card bill.
“It doesn’t create new deficits. It doesn’t create new spending,” Bernanke said. “It’s very, very important that Congress take necessary action to raise our debt ceiling to avoid a situation where our government doesn’t pay its bills.”
Current federal law limits the amount the Treasury Department can borrow to $16.4 trillion. But Congress has appropriated, and Obama has signed into law, spending that far exceeds what the government collects in revenue, requiring additional borrowing. If Congress doesn’t act, the United States would not be able to pay its bills, causing the first widespread default in U.S. history.
Treasury Secretary Timothy Geithner notified Congress on Monday that the government would reach that point between “mid-February and early March.”
The debt-ceiling deadline isn’t the only fiscal fight coming to a head. A set of deep spending cuts are to take effect in early March and a few weeks later, the government would shut down if Congress does not authorize continued spending for routine operations. Republican leaders also have been considering these pressure points as ways to force spending cuts on the White House.
House Speaker John Boehner, R-Ohio, and his GOP leadership team convened behind closed doors this past weekend to draft a strategy to discuss with rank-and-file lawmakers later this week.
Boehner’s task is complicated by a rowdy conservative wing that has diminished his ability to control the House Republican majority. Having stomached tax hikes in the year-end fiscal-cliff deal, many conservative Republicans are primed to win major spending cuts and are willing to take drastic action.
“The debt limit is one of the last stop signs left in Washington, and Congress should use it to force the president to enact tax and spending reform,” said conservative Rep. Tom Graves, R-Ga.
Yet some more moderate voices that are influential with the GOP, including the Chamber of Commerce, have warned against another debt-ceiling fight to avoid the potential catastrophic risk of a default.
“We are supportive of the U.S. paying its debts and concurrently reducing operating expenses to put the U.S. economy on stronger financial footing in the long term,” said Scott Talbott, a spokesman for the powerful Financial Services Roundtable, a leading association of bankers and Wall Street firms.
Republican strategist Karl Rove noted last week in a column in The Wall Street Journal that Republicans in Congress may not like having to raise the debt ceiling without gaining their full wish-list of spending cuts, but “that’s the cost of losing the 2012 election.”
The speaker tried to balance these competing pressures in his response Monday to the president.
“The American people do not support raising the debt ceiling without reducing government spending at the same time,” Boehner said. He did not mention his insistence on what has come to be called the Boehner rule: at least a dollar-per-dollar ratio of spending reductions to new debt.
But Boehner also hinted at the limits of the fight. “The consequences of failing to increase the debt ceiling are real, but so too are the consequences of allowing our spending problem to go unresolved,” he said.
The continued fight over taxing and spending in Washington is clearly poised to crowd out other priorities in Obama’s second term — as it did in his final news conference.
Obama referred only briefly to the rest of his legislative agenda — job creation, immigration reform and gun control.