Speaking at the final news conference of his first term, President Barack Obama demanded on Monday that lawmakers raise the nation’s $16.4 trillion federal debt limit quickly.
The president stressed that voting to increase the debt limit “does not authorize more spending. It simply allows the country to pay for spending that Congress has already agreed to. These are bills we’ve already racked up and we need to pay them.”
The debt limit must be raised if the federal government has any hope of avoiding the March 1stdefault deadline. After Mark 1st a host of automatic and wide sweeping spending cuts will launch and according to government experts, that means funding for most government programs will run out on March 27.
On Monday Obama stated, “If congressional Republicans refuse to pay America’s bills on time, Social Security checks and veterans’ benefits will be delayed. We might not be able to pay our troops.” President Obama also informed Republicansthat they should not plan on using reductions in government spending as a negotiating ploy in this situation.
“They will not collect a ransom in exchange for not crashing the economy,” Obama said at the press conference which lasted over an hour. “The full faith and credit of the United States of America is not a bargaining chip.”
“We are not a deadbeat nation,” Obama continued.
However, it seems the President is on an unavoidable collision course with Republicans on the debt limit issue.
House Speaker John Boehner(Republican – Ohio) seemed just as determined not to negotiate in a statement he released: “The American people do not support raising the debt ceiling without reducing government spending at the same time. … The House will do its job and pass responsible legislation that controls spending, meets our nation’s obligations and keeps the government running…”
“The president and his allies need to get serious about spending, and the debt-limit debate is the perfect time for it,” Senate Minority Leader Mitch McConnell (R-Ky.) said in response to Obama’s remarks.
Obama mentioned that he would be willing to meet with Republicans on the debt spending issue, but that that his readiness to negotiate does not extend to the $16.4 trillion debt ceiling.
Despite their vast differences, neither side can truly afford a long and drawn out standoff. The government has already technically reached the debt limit, but thanks to a series of “extraordinary measures” adopted by the Treasury Department the federal government has been allowed to continue to finance operations for approximately two additional months. These unusual moves by the Treasury Department have provided Congress and President Obama with a grace period until early March to raise the debt ceiling.
If the two sides fail to reach an agreement on the debt ceiling by the third month of 2013, the government would quickly be at risk of an unprecedented default on the debt. An outcome of this nature would have dire consequences for both domestic and global financial markets.
The President acknowledged the drastic impact a stalemate would have both here at home and around the world in his press conference saying, “Investors around the world will ask if the United States is, in fact, a safe bet. Markets could go haywire,” he said. “It would be a self-inflicted wound on the economy. It would slow down our growth, might tip us into recession. And ironically it would probably increase our deficit.”
In theory both the President and Republican leaders are working on borrowed time.