Obama is gunning to bring on debt creation and do away with the debt ceiling

14 January 2013 Last updated at 18:02
http://www.bbc.co.uk/news/world-us-canada-21017052

Debt ceiling debate: Obama stakes out position

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.

He told a White House news conference it would be “absurd” to use the debt ceiling as a negotiating chip.

Republican House Speaker John Boehner said a debt ceiling rise should be accompanied by spending cuts.

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.
‘Ransom’

The Democratic president warned lawmakers that they would “not collect a ransom… for not crashing the economy”.

“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.

President Obama: “Members of Congress need to examine their own conscience”

“America cannot afford another debate with this Congress about whether or not we should pay the bills we’ve already racked up,” he added.

“We are not a deadbeat nation,” Mr Obama 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.

“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.

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.”

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.

Leave a Reply