Obama refuses to negotiate debt ceiling raise

WASHINGTON Tue Jan 15, 2013 1:29am IST

U.S. President Barack Obama takes questions from reporters during a news conference at the White House in Washington, January 14, 2013. REUTERS/Jonathan Ernst

U.S. President Barack Obama takes questions from reporters during a news conference at the White House in Washington, January 14, 2013.

Credit: Reuters/Jonathan Ernst

Related Topics

A statue of Ganesh, the deity of prosperity, is carried in a taxi to a place of worship on the first day of the ten-day-long Ganesh Chaturthi festival in Mumbai August 29, 2014. REUTERS/Danish Siddiqui

Ganesh Chaturthi Festival

During Ganesh Chaturthi idols will be taken through the streets in a procession accompanied by dancing and singing, and will be immersed in a river or the sea in accordance with Hindu faith.  Slideshow 

WASHINGTON (Reuters) - President Barack Obama on Monday rejected any negotiation with Republicans over the most pressing U.S. fiscal issue, refusing to trade cuts in government spending in exchange for raising the borrowing limit.

"If the goal is to make sure that we are being responsible about our debt and our deficit - if that's the conversation we're having, I'm happy to have that conversation," Obama said. "What I will not do is to have that negotiation with a gun at the head of the American people," he told a news conference.

Republican leaders quickly reiterated their demand that increasing the debt limit must be accompanied by spending cuts.

With an agreement to prevent the so-called fiscal cliff of sharp spending cuts and tax increases barely two weeks old, Obama faces another fiscal showdown with congressional Republicans.

A trio of deadlines looms around the end of February: the need to raise the debt ceiling, automatic deep spending cuts temporarily put off in the fiscal cliff deal, and the end of a stopgap government funding measure.

The United States could default on its debt if the borrowing limit is not increased.

Some Republicans have said they would require dollar-for-dollar spending cuts to match any increase in the debt limit. Obama's unexpected news conference could have been a pre-emptive strike aimed at influencing strategy sessions among Republican lawmakers scheduled for later this week.

A number of Republicans have said they would be willing to allow a U.S. debt default or a government shutdown to force the Obama administration to accept deeper spending cuts than the White House would like.

Obama said he would agree to talk about steps to trim the U.S. budget deficit, but made clear he wants to keep that discussion separate from the debt ceiling increase. He held to his position that deficit reduction should include measures to raise revenue and not come from spending cuts alone.

Republicans have rejected that approach, saying the fiscal cliff deal, which raised taxes for the wealthy while maintaining low tax rates for most Americans, should have put to rest the discussion over tax increases.

Obama must get "serious about spending and the debt limit is the perfect time for it," Senate Republican leader Mitch McConnell said in a statement just moments after Obama's news conference ended.

Republican John Boehner, the House of Representatives speaker, said: "The American people do not support raising the debt ceiling without reducing government spending at the same time."

If Congress fails to raise the U.S. debt limit, the Treasury Department will become unable to borrow money to pay for government spending obligations, leading to a debt default that would damage U.S. credit and have wide repercussions in financial markets around the world.

Protracted haggling over raising the debt ceiling in 2011 brought the nation close to default and resulted in a credit rating downgrade and financial market turmoil that slowed economic recovery.

Fiscal issues loomed large during the final news conference of Obama's first term, which came a week before a gala inauguration ceremony that will launch his next four years. Fights with Congress over taxes and spending have overshadowed much of his domestic agenda over most of the last two years with the president facing legislative gridlock that shows little sign of abating.

Obama raised the specter of a severe setback to the U.S. economy if congressional Republicans persist with the threat of a debt default.

"It would be a self-inflicted wound on the economy," he said. "Even entertaining the idea of this happening, of the United States of America not paying its bills, is irresponsible. It's absurd." (Additional reporting byu Matt Spetalnick, Jeff Mason and Steve Holland, Editing by Alistair Bell and Mohammad Zargham)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Market Eye

REUTERS SHOWCASE

HSBC PMI

HSBC PMI

Factory activity expands at slower clip in August.  Full Article 

Modi in Japan

Modi in Japan

Japan aims to double India investment in 5 years - Nikkei  Full Article 

Market Outlook

Market Outlook

Indian shares headed for correction, but outlook strong - BofA Merrill.  Full Article 

India Infrastructure

India Infrastructure

RBI rule handicaps India's infrastructure hopes  Full Article 

Book Talk

Book Talk

Reema Abbasi and a glimpse of Pakistan’s Hindu past  Full Article 

China Economy

China Economy

Retreat in China's PMIs heightens calls for policy easing.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage