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Obama Says G.O.P. Won’t Get ‘Ransom’ to Lift Debt Limit
Obama and G.O.P. Issue Challenges on the Debt Limit
(about 7 hours later)
WASHINGTON — President Obama on Monday warned Republicans against refusing to raise the nation’s debt ceiling, calling such talk “irresponsible” and “absurd” and saying it would set off an economic crisis and financial hardship.
WASHINGTON — With each side claiming popular support, President Obama and Congress’s Republican leaders on Monday dug in on their conflicting positions about raising the nation’s debt limit, indicating that the president’s second term will open with a potentially perilous budget showdown.
“They will not collect a ransom in exchange for not crashing the American economy,” Mr. Obama said during his final news conference of his first term in office. “The full faith and credit of the United States of America is not a bargaining chip.”
Mr. Obama called the final news conference of his first term to reinforce before national television cameras his demand that Congress unconditionally increase the legal limit on the government’s authority to borrow money to pay its bills. But Republicans continued to insist that he agree to equal spending cuts.
The president repeated his vow to seek what he called a “balanced” approach to reduce the nation’s deficit during the months ahead. But he said he would not negotiate on the debt ceiling, and he said Republicans in Congress would be responsible for the effects of a refusal to raise it.
“They will not collect a ransom in exchange for not crashing the American economy,” Mr. Obama vowed in the East Room, a week before his second inauguration. “The financial well-being of the American people is not leverage to be used. The full faith and credit of the United States of America is not a bargaining chip.”
“It would be a self-inflicted wound on the economy,” Mr. Obama said. “It would slow down our growth and tip us into recession. To even entertain the idea of this happening is irresponsible. It’s absurd.”
House Speaker John A. Boehner, immediately after Mr. Obama’s news conference, said in a statement: “The American people do not support raising the debt ceiling without reducing government spending at the same time. 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 added: “America cannot afford another debate with this Congress about whether or not they should pay the bills they’ve already racked up.”
With the president refusing to negotiate over the essential increase and Republicans saying he must, reporters pressed Mr. Obama about whether he is considering some executive action to sidestep Congress and raise the debt ceiling — as Democratic leaders have urged. But Mr. Obama declined to answer directly, and his administration has ruled out proposals to either invoke authority under the 14th Amendment or mint a platinum coin as a sort of collateral for more debt.
Mr. Obama disclosed that Vice President Joseph R. Biden Jr. had already presented him with proposals to combat gun violence and promised to unveil them publicly later this week. He said his package would include a ban on assault weapons and on high-capacity magazines, as well as expanded background checks. But he declined to say how hard he would push for an assault weapons ban, and acknowledged that it and other gun measures might not pass.
The debt issue dominated the news conference, and later the Treasury secretary, Timothy F. Geithner, added to the pressure by writing to Congressional leaders that the department still expects to hit the limit between mid-February and early March.
“We’re going to have to come up with answers that set politics aside, and that’s what I expect Congress to do,” he said, reiterating his support for gun measures. “Will all of them get through this Congress? I don’t know. But what’s uppermost in my mind is making sure I’m honest with the American people and Congress about what I think will work.”
“Treasury would be left to fund the government solely with the cash we have on hand on any given day,” he said, forcing it to choose among creditors, federal contractors, veterans, Social Security and Medicare beneficiaries and the many other claimants to federal dollars. Some Republicans support temporarily making choices among claimants, but the administration and some financial analysts say that approach would be unworkable and amount to the nation’s first default on its obligations.
Mr. Biden said last week that he would present his recommendations to Mr. Obama on Tuesday, so the president’s comments suggested that the timetable had been moved up. He said that the vice president’s working group had “presented me now with a list of sensible common-sense steps,” and that he would meet with Mr. Biden later on Monday. He added that he expected to make a “fuller presentation” later in the week.
Separately, Mr. Geithner and Gene Sperling, director of the White House National Economic Council, held a conference call with corporate executives, many of whom have expressed concern the threat of default could damage the economy. The administration is hoping that business leaders can persuade Republicans to avoid confrontation over the debt limit, but party leaders were undeterred.
Six days before he is to be inaugurated again, Mr. Obama is preparing a brisk agenda for the early days of his second term. In addition to negotiations over the debt limit, Mr. Obama is preparing for a difficult debate over spending cuts and has said he will propose a comprehensive overhaul of the nation’s immigration system.
The Federal Reserve chairman, Ben S. Bernanke, also called on Congress to increase the debt ceiling to cover bills that it has already incurred. “The right way to deal with this problem is for Congress to do what it is supposed to do and what it needs to do,” Mr. Bernanke, a Republican appointed by President George W. Bush and later reappointed by Mr. Obama, said in a speech at the University of Michigan.
The president is also seeking approval of a new team to lead his government, having made nominations to replace his secretaries of state, defense and the Treasury. The efforts to reshape his administration — some of which are already proving difficult — are likely to dominate much of the next several weeks.
On a separate topic at the news conference, Mr. Obama defended his record on appointing women and minorities to administration jobs, responding to criticism of the largely white male composition of his inner circle and recent cabinet nominations.
Mr. Obama defended himself against criticism that his top second-term appointees so far had all been white men, saying his first-term team was “as diverse, if not more diverse, a White House and cabinet as any in history.” He pointed out that over the past four years his secretary of state, homeland security secretary, two Supreme Court justices and top health care advisers were all women.
“I would just suggest that everybody kind of wait until they’ve seen all my appointments, who’s in the White House staff and who’s in my cabinet before they rush to judgment,” he said. “It’s premature to assume that somehow we’re going backwards. We’re not going backwards, we’re going forward.”
He urged critics not to “rush to judgment,” because he had made only a few selections so far. “Until you’ve seen what my overall team looks like, it’s premature to assume that somehow we’re going backwards,” he said. “We’re not going backwards, we’re going forward.”
On the budget, Mr. Obama tried several times to emphasize that the debate over the debt ceiling was not one over how much the government should spend.
Holding a news conference now suggested that the president was eager to begin pushing his agenda even in advance of his inaugural speech next Monday and his State of the Union speech on Feb. 12.
“I want to be clear about this: The debt ceiling is not a question of authorizing more spending,” he said. “Raising the debt ceiling does not authorize more spending. It simply allows the country to pay for spending that Congress has already committed to.”
Mr. Obama on Monday rejected the idea of a “Plan B” that might avoid a clash with Republicans over the debt ceiling. Some ideas that have been floated include minting a $1 trillion platinum coin that could allow the government to spend beyond the debt ceiling.
He said that he agreed with Republicans that spending must be reduced to stabilize the debt. Unlike Republicans, though, he argued that such cuts should not be a condition for increasing the debt limit and should instead be part of other budget talks.
The president did not directly address the idea of such a coin, but he said: “There are no magic tricks here. There are no loopholes. There are no easy outs.”
Mr. Boehner said the Republican-controlled House would pass legislation cutting spending and increasing the debt limit, and would defy Mr. Obama and the Democratic-controlled Senate to reject the package. : The Senate Republican minority leader, Mitch McConnell, in his own statement, also demanded spending cuts for a debt-limit increase.
Mr. Obama said he understood the “impulse to get around this in a simple way,” but he said that there was no way around the need for Congress to authorize enough debt as is necessary to pay for spending that had already been approved.
House Republicans will meet for a retreat on Thursday and Friday in Williamsburg, Va., largely to develop plans to get through the three approaching fiscal deadlines. In addition to the debt ceiling, the automatic across-the-board military and domestic cuts will begin March 1 unless Mr. Obama and Congress agree to alternative deficit reductions, and the law providing financing for federal operations expires March 27.
“What Congress can’t do is tell me to spend ‘X’ and then say we’re not going to give you the authority to pay the bills,” Mr. Obama said.
“Yes, the House is going to act,” said Rory Cooper, a spokesman for Representative Eric Cantor of Virginia, the House majority leader. But, he added, “We’ve got nothing yet until we can sit down as a conference and hammer out what we all want to do.”
Mr. Obama seemed to grow somewhat testy at continued questions about his refusal to negotiate over the debt ceiling. “We can’t manage our affairs in such a way that we pay our bills and we provide some certainty in the way we pay our bills?” he said with a tone of exasperation. “I don’t think anyone would consider my position unreasonable here.”
Senate Democratic leaders are likely to act early next month on legislation that would allow the president to raise the debt ceiling on his own, both now and in the future. But just as the Senate would most likely reject the bill that House Republicans are considering, House Republicans would probably oppose the Senate Democrats’ proposal.
Responding to Mr. Obama’s remarks, the House speaker, John A. Boehner of Ohio, said in a statement: “The American people do not support raising the debt ceiling without reducing government spending at the same time. 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.”
Under the contemplated Senate bill, Congress could move to block an increase in the debt limit, but lawmakers would have to muster a two-thirds majority in both the Senate and House. Still, Senate Democratic leadership aides say they are unsure of their party’s next move; Democrats might decide to wait until the House sends the Senate its debt-limit bill, with cuts Democrats consider unacceptable, and then seek to pass an amended version.
He added: “Without meaningful action, the debt will continue to act as an anchor on our economy, costing American jobs and endangering our children’s future. The House will do its job and pass responsible legislation that controls spending, meets our nation’s obligations and keeps the government running, and we will insist that the Democratic majority in Washington do the same.”
House Republicans have already listed cuts to programs including food stamps, children’s health insurance, Medicaid, state and local grants to pay for antipoverty initiatives like Meals on Wheels and other programs. But their package underscores the challenge for even Republicans to meet their condition that spending cuts equal the amount of the debt increase.
On the debt limit, the Treasury has said it must be increased between mid-February and March so the government can continue to borrow to pay its bills, including to foreign creditors, Social Security beneficiaries and myriad others over obligations incurred by presidents and Congresses over the years.
Their tentative measure, combined with $550 billion in across-the-board reductions from other domestic programs, would save nearly $900 billion over 10 years — enough to raise the debt ceiling for about one year, forcing Congress to look for more cuts in 2014, an election year.
Congressional Republicans have said they will not support an increase without dollar-for-dollar spending cuts. But Mr. Obama vows that he will not be forced into negotiations that put the nation’s credit at risk, as it was in mid-2011, when brinkmanship damaged the economy and led one rating firm to downgrade the nation’s credit rating.
Mr. Obama said he hoped that common sense would prevail in discussions over spending, but added that if Republicans chose to “shut the government down,” the party would be responsible for the consequences.
“If the Republicans in Congress have made a decision that they want to shut down the government in order to get their way, then they have the votes, at least in the House, to do that,” he said.
He said that if that happened, it would be “a mistake” and “short-sighted.”
He said Republicans were driven by a suspicious view of government that led them to want cuts in services that benefited older people and children.
“That view was rejected by the American people when it was debated during the presidential campaign,” he said.
On guns, Mr. Obama pledged to take executive actions, where possible, to reduce gun violence in areas that do not require legislation. He cited better data collection about gun violence by the federal government as one area he might be able to address administratively.
The president blamed gun rights groups for scaring people into thinking that the government was about to take away their guns.
“Even the slightest hint of some sensible, responsible legislation in this area fans this notion that somehow, here it comes, everybody’s guns are going to be taken away,” Mr. Obama said.
He said the increases in gun sales in recent weeks were understandable, given the comments of the gun rights groups. But he said law-abiding gun owners should not be concerned that his administration wants to limit their ability to own weapons.
“They don’t have anything to worry about,” Mr. Obama said. “The issue here is not whether or not we believe in the Second Amendment.”
He added, “It’s a fear that’s fanned by those who are worried about the possibility of any legislation getting out there.”
On immigration, the White House said over the weekend that the president planned to propose a comprehensive bill that would give illegal immigrants a pathway to citizenship. A similar effort failed to advance six years ago despite a push by President George W. Bush.
But White House aides believe that Republicans will be more amenable to that effort now, following the presidential election, in which Hispanic voters overwhelmingly supported Mr. Obama.
As he wraps up his first term, Mr. Obama also defended himself against the perception that he is insular and has not done more to reach out to members of Congress in less formal ways to build relationships that would help defuse tension over issues like the debt ceiling.
“I’m a pretty friendly guy,” he said. “I like a good party.”
But he noted that holding Congressional picnics at the White House and going golfing with Mr. Boehner had not resulted in a grand bargain over spending and taxes. “We had a great time,” he said. “But that didn’t get a deal done in 2011.”
He added that his daughters were getting older and did not want to spend as much time with him, so perhaps he would have more time for socializing with lawmakers in his second term. “I’m getting kind of lonely in this big house,” he said. But the divisions of recent years are rooted in serious policy differences, he added. “That’ll be true whether I’m the life of the party or a stick in the mud,” he said.
