Obama: “We are not a deadbeat nation”
Trying to avoid a repeat of the 2011 debt ceiling debacle, President Barack Obama insisted that he will not “negotiate” with Republicans who are looking to hold hostage the debt limit increase to exact steep cuts to Social Security and Medicare.
Increasing the debt limit – which used to be a non-controversial, routine procedure – would enable the federal government to borrow cash to pay for the spending that Congress has authorized.
“The debt ceiling is not a question of authorizing more spending. Raising the debt ceiling does not authorize more spending. It simply allows the country to pay for spending that Congress has already committed to. These are bills that have already been racked up and we need to pay them,” Obama told reporters during the final press conference of his first term. “The issue here is whether or not America pays its bills. We are not a deadbeat nation. And so there’s a very simple solution to this: Congress authorizes us to pay our bills.”
Obama’s remarks reflected a tougher political posture than his meek and defensive approach during the prior debt limit showdown.
Read more: U.S. debt ceiling timeline 2011
In the summer of 2011, House Republicans used the threat of U.S. government default to exact more than $2 trillion in spending cuts, including the oft-vilified $1 trillion “sequestration” or across-the-board cuts to defense and non-defense discretionary programs that some Republicans now want to undo.
Although Congress eventually approved the debt limit increase, the bitter partisan battles resulted in the unprecedented downgrade of the U.S. credit rating.
Even so, Republican House Speaker John Boehner has made clear throughout the ‘fiscal cliff’ negotiations that there will be “some price tag” associated with increasing the debt limit.
“I continue to believe that any increase in the debt limit has to be accompanied by spending reductions that meet or exceed it,” said Boehner, confirming that his position remains unchanged since the 2011 debacle.
Going on the offensive this time around, the President is trying to brand House Republicans as irresponsible fiscal extremists who are willing to push the government to default and inflict severe damage to the U.S. economy to further their anti-government, anti-safety net agenda.
“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,” said Obama. “Republicans in Congress have two choices here: They can act responsibly, and pay America’s bills; or they can act irresponsibly, and put America through another economic crisis. But they will not collect a ransom in exchange for not crashing the American economy.”
Obama warned that failure to increase the debt limit will force the federal government to delay or default on payments for Social Security, Medicare, Medicaid, military salaries and retirement, veterans’ benefits, defense contractors, income tax refunds, disaster relief, unemployment insurance, law enforcement, and many others.
In addition, the threat of default could lead to loss of investor confidence and another downgrade of the U.S. credit rating, which would make it even more difficult and expensive for Americans to secure loans for their businesses, homes, and college education.
“Investors around the world will ask if the United States of America is, in fact, a safe bet. Markets could go haywire. Interest rates would spike for anybody who borrows money — every homeowner with a mortgage, every student with a college loan, every small business owner who wants to grow and hire,” said Obama. “It would be a self-inflicted wound on the economy. It would slow down our growth, might tip us into recession, and ironically, would probably increase our deficit.”
- WhatTheFolly.com: Transcript: President Barack Obama on the debt ceiling
- WhatTheFolly.com: Transcript: Boehner – “I’m disappointed in where we are on fiscal cliff talks”
- WhatTheFolly.com: Transcript: Treasury Secretary Timothy Geithner’s remarks on the fiscal cliff at the Wall Street Journal CEO Council
- WhatTheFolly.com: 5 key facts about sequestration
- WhatTheFolly.com: Analysis: Impact of sequestration on non-defense discretionary spending
- WhatTheFolly.com: Sequestration will result in a ‘hollowed out’ military, armed forces chiefs warned
- WhatTheFolly.com: U.S. debt ceiling timeline 2011
- Treasury.gov: Letter from Treasury Secretary Tim Geithner to House Speaker John Boehner on the debt limit on Jan. 14, 2013 (PDF)
- Speaker.gov: Speaker Boehner Response to President Obama’s Press Conference
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