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Debt ceiling debate: Obama stakes out position Debt ceiling debate: Obama stakes out position
(about 1 hour later)
America is "not a deadbeat nation", US President Obama has said, warning Republicans not to hold the economy to ransom on the federal borrowing limit. America is "not a deadbeat nation", US President Barack Obama has said, as he warned Republicans unconditionally to approve a rise in the US debt ceiling.
He told a White House news conference it would be "absurd" to use the debt ceiling as a negotiating chip. At a White House news conference, he said it would be "absurd" to use the borrowing limit as a negotiating chip.
Republican House Speaker John Boehner said a debt ceiling rise should be accompanied by spending cuts. But Republican House Speaker John Boehner said spending cuts should accompany a federal debt ceiling rise.
The US is expected to hit its $16.4tn (£10.2tn) borrowing limit by February unless lawmakers act.The US is expected to hit its $16.4tn (£10.2tn) borrowing limit by February unless lawmakers act.
Monday's press conference came a week before the inauguration ceremony in Washington DC that will begin Mr Obama's second term.Monday's press conference came a week before the inauguration ceremony in Washington DC that will begin Mr Obama's second term.
'Ransom''Ransom'
The Democratic president warned lawmakers that they would "not collect a ransom... for not crashing the economy". With an agreement to prevent the so-called fiscal cliff of sharp spending cuts and tax increases barely two weeks old, Mr Obama faces another budget showdown with congressional Republicans.
We heard tough talk from Barack Obama, but any American watching this evolving debate must have a sickening sense of deja vu. We heard tough talk from Barack Obama, but any American watching this evolving debate must have a sickening sense of deja vu. Everything points to another round of torturous brinkmanship, probably culminating in a last-minute compromise reminiscent of New Year's deal on the so-called fiscal cliff.
Everything points to another round of torturous brinkmanship, probably culminating in a last-minute compromise reminiscent of New Year's deal on the so-called fiscal cliff. Publicly, the president is standing firm. He insists he will not allow the debt ceiling to be used as a bargaining chip in wider discussions about deficit reduction. But Republicans will gamble that Mr Obama has the most to lose from a default on his watch, and will therefore inevitably come to the table.
Publicly, the president is standing firm. He insists he will not allow the debt ceiling to be used as a bargaining chip in wider discussions about deficit reduction. Might the unthinkable happen and America tumble into default? It is more possible now than ever, but still unlikely, I think. President Obama's remarks rang truest when he said the American people would blame "all of Washington for not being able to get its act together".
But Republicans will gamble that Mr Obama has the most to lose from a default on his watch, and will therefore inevitably come to the table. The Democratic president warned lawmakers: "They will not collect a ransom in exchange for not crashing the economy."
Might the unthinkable happen and America tumble into default? He demanded that Republicans in charge of the House of Representatives approve a rise in the federal government's authority to borrow money to pay existing obligations - without seeking policy concessions in return.
It is more possible now than ever, but still unlikely I think. The last debt ceiling battle between Congress and Mr Obama ended in July 2011, after bringing the nation close to default and resulting in a credit rating downgrade as well as financial market turmoil.
President Obama's remarks rang truest when he said the American people would blame "all of Washington for not being able to get its act together".
"The full faith and credit of the United States of America is not a bargaining chip. And they [Republicans] better decide quickly because time is running short," Mr Obama said."The full faith and credit of the United States of America is not a bargaining chip. And they [Republicans] better decide quickly because time is running short," Mr Obama said.
"America cannot afford another debate with this Congress about whether or not we should pay the bills we've already racked up," he added. He said he was happy to engage in debate over US fiscal policy, but only after an increase in the debt limit.
"We are not a deadbeat nation," Mr Obama said. "We are not a deadbeat nation," he said.
Afterwards, Mr Boehner, leader of the House Republicans, acknowledged the economic peril of failing to raise the debt ceiling. But he indicated the House would attach spending cuts to any legislation to raise the borrowing authority. "While I'm willing to compromise and find common ground over how to reduce our deficits, America cannot afford another debate with this Congress about whether or not they should pay the bills they've already racked up."
He added: "What I will not do is to have that negotiation with a gun at the head of the American people."
Afterwards, Mr Boehner, leader of the House Republicans, acknowledged the economic risk of failing to raise the debt ceiling. But he indicated the House would attach spending cuts to any measure to raise the federal borrowing authority.
"The American people do not support raising the debt ceiling without reducing government spending at the same time," he said in a statement."The American people do not support raising the debt ceiling without reducing government spending at the same time," he said in a statement.
Speaking on a day marking a month on from the massacre at a Connecticut primary school that shocked the nation, Mr Obama also said he would present proposals for gun control later in the week.Speaking on a day marking a month on from the massacre at a Connecticut primary school that shocked the nation, Mr Obama also said he would present proposals for gun control later in the week.
He said stronger background checks, control of high capacity magazine clips, and an assault weapons ban were all measures he believed made sense.He said stronger background checks, control of high capacity magazine clips, and an assault weapons ban were all measures he believed made sense.
"Will all of them get through this Congress?" he asked. "I don't know.""Will all of them get through this Congress?" he asked. "I don't know."
The National Rifle Association and some lawmakers have suggested that any plan to ban assault weapons would not pass Congress.The National Rifle Association and some lawmakers have suggested that any plan to ban assault weapons would not pass Congress.
Ahead of the debt ceiling fight, the White House in recent days has stated it will forgo two extraordinary measures suggested by the president's allies and by left-leaning pundits.
The White House will not order the treasury to mint a $1tn platinum coin - an accounting measure that would allow spending to continue.
Nor will Mr Obama invoke a clause in the 14th amendment to the US constitution declaring that "the validity of the public debt of the United States... shall not be questioned".
The last debt ceiling battle between Congress and Mr Obama ended in July 2011. The ceiling was raised $2.4tn in exchange for automatic across-the-board spending cuts scheduled for 1 January 2013.
Mr Obama had previously said he wanted a permanent extension of the debt limit as part of a deal to avoid those spending cuts which, combined with a package of tax rises, was known as the fiscal cliff.
A last-minute deal in Congress avoided most of those tax rises and deferred the spending cuts by two months, but the debt ceiling limit was not part of the negotiations.
In preparation for the debt ceiling fight, Treasury Secretary Timothy Geithner has already cut payments into the pension and disability fund for government workers and to the health benefits fund of postal retirees.
The Bipartisan Policy Center estimates Mr Geithner's "extraordinary measures" will be exhausted between 15 February and 1 March.