Obama demands quick action to raise US debt limit

WASHINGTON — President Barack Obama demanded yesterday that Congress quickly raise the federal debt limit and warned that he will not allow the Republican opposition to “collect a ransom for crashing the US economy,” again setting out a tough negotiating position on an issue that threatens to shut down the American government.

Obama showed a new get-tough stance toward Congress a week before he is sworn in for a second term. No longer facing re-election, the president appeared willing to spend the political capital he believes he accrued after winning handily and seeing Democrats improve their numbers in Congress.

Democratic critics of the president in his first term had voiced serious reservations about his willingness to give ground to Republicans on the debt ceiling issue two years ago, after a huge partisan fight resulted in an unprecedented downgrade of the US credit rating and left in place across-the-board tax cuts established during the George W Bush administration.

This time around, Obama said Republicans who want to dramatically cut spending in return for raising US borrowing limits “will not collect a ransom in exchange for not crashing the economy.”

“The full faith and credit of the United States of America is not a bargaining chip. And they better decide quickly because time is running short,” Obama declared, insisting, “We are not a deadbeat nation.”

He also said he was not willing to continue facing prolonged and bitter debates on the debt, a current reality that he says is hurting the US recovery from the Great Recession.

“I don’t think anybody would consider my position to be unreasonable here,” he said.

The most powerful Republican in Washington, Speaker of the House John Boehner, reacted quickly, saying the Republican-controlled House of Representatives will “do its job” on the debt ceiling but will insist that Democrats accept new spending controls.

Boehner acknowledged that failing to lift the debt ceiling would have bad consequences. But he also said that “allowing our spending problem to go unresolved” would be just as troublesome.

Until the partisan fight over the debt ceiling broke out in 2011, the limit on borrowing had been increased by Congress as a matter of course.

But with a surge in Tea Party Republicans elected to the House of Representatives in 2010, the opposition party has sought to use the power over the debt to enforce its desires for smaller government and spending cuts.

Obama said he was willing to consider future deficit cuts, but only if they are done independently from a vote to raise the US$16.4 trillion debt limit.

In a blunt rebuttal to Republicans who say they will not agree to any more tax increases, the president said taxes and spending both must be on the table.

Obama said he is “open to making modest adjustments to programmes like Medicare, the federal health insurance programme for Americans at age 65, to protect them for future generations,” and wants to close tax loopholes at the same time.

Obama spoke several days after he signed legislation that narrowly averted a “fiscal cliff” of automatic spending cuts and across-the-board tax increases.

Combined with other bills he signed earlier in the term, he said he and Congress have reduced deficits by about US$2.5 trillion over a decade, somewhat less than the US$4 trillion he said is necessary to get them down to a manageable size.

“I’m happy to have a conversation about how we reduce our deficits in a sensible way,” he said, but added repeatedly he wasn’t willing to let congressional Republicans use the debt limit as leverage in negotiations over spending cuts.

Failure to raise the debt limit would put the United States into a first-ever default, a step that Obama said could “blow up the economy.”

Congressional Democrats have recently urged the president to lift the debt limit unilaterally. He said — as he has before — that he won’t do it, that Congress had voted for the spending that resulted in federal borrowing and should now agree to pay the bill.

Obama made his remarks as a new Congress was settling in for its own new term, Republicans in control of the House and Democrats in the Senate.

Lawmakers face three distinct deadlines before April 1. The debt limit must be raised to prevent a default, a series of across-the-board spending cuts is to kick in on March 1, and funding for most government programmes will run out on March 27.

Obama virtually dared Republicans to let the government shut down rather than renew funding beyond March 27. “It will hurt the economy,” he said emphatically. (AP)