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Obama seems to gain ground in debt fight

He delivers a forceful defense of his stance, and the GOP appears increasingly divided.

January 15, 2013|Kathleen Hennessey, Lisa Mascaro and Christi Parsons
  • President Obama in the final news conference of his first term.
President Obama in the final news conference of his first term. (Chip Somodevilla, Getty…)

WASHINGTON — With the government just weeks from running out of money to pay its bills, President Obama and prominent Republicans have started to act as if the White House has the upper hand in the current round of the battle over federal spending.

In recent days, Obama rebuffed suggestions that he consider ways to sidestep the need to raise the limit on the government's debt, reinforcing his demand for a congressional vote. On Monday, he repeated that stand in a hastily announced news conference, criticizing Republicans for threatening to "blow up the economy" and insisting that "no simpler way" exists to deal with the debt ceiling.

Republicans for months have pointed to the moment the nation runs up against the debt ceiling as their point of maximum leverage to force spending cuts, but now seem increasingly divided. Some leaders appear to be looking for a way out of the confrontation, suggesting the party would be wiser to fight Obama over cuts when less is at stake for the economy. Influential GOP strategists are warning that a repeat of the fight they waged in summer 2011 could backfire.

Obama used his bully pulpit in the East Room on Monday to repeat his vow not to negotiate with Republicans on the borrowing limit. The president, who began his first term promising to bridge the party divide, employed unusually vivid language to disparage his GOP adversaries. He called their strategy "absurd" and compared it to pointing "a gun at the head of the American people."

"They can act responsibly and pay America's bills, or they can act irresponsibly and put America through another economic crisis," Obama told reporters. "But they will not collect a ransom in exchange for not crashing the American economy."

Obama, who negotiated spending cuts as part of an agreement to raise the debt limit in 2011, but voted against raising it as a senator in 2006, sought to reframe the debate in terms favorable to his current position. "Raising the debt ceiling does not authorize us to spend more. All it does is say that America will pay its bills. And we are not a deadbeat nation," Obama said.

The president laid out a harrowing scenario if the nation suffered "a self-inflicted wound on the economy" and defaulted on its debt. "Social Security checks and veterans' benefits will be delayed," he said. "Food inspectors, air traffic controllers, specialists who track down loose nuclear material wouldn't get their paychecks. Investors around the world will ask if the United States of America is, in fact, a safe bet. Markets could go haywire."

Obama got some help from Federal Reserve Chairman Ben S. Bernanke, who compared not raising the debt ceiling to not paying a credit card bill. "It doesn't create new deficits. It doesn't create new spending," he said. "It's very, very important that Congress take necessary action to raise our debt ceiling to avoid a situation where our government doesn't pay its bills."

Current federal law limits the amount the Treasury Department can borrow to $16.4 trillion. But Congress has appropriated, and Obama has signed into law, spending that far exceeds what the government collects in revenue, requiring additional borrowing. If Congress doesn't act, the nation would not be able to pay its bills, causing the first widespread default in U.S. history.

Treasury Secretary Timothy F. Geithner notified Congress on Monday that the government would reach that point between "mid-February and early March."

The debt ceiling deadline isn't the only fiscal fight coming to a head. A set of deep spending cuts is scheduled to take effect in early March, and a few weeks later the government would shut down if Congress does not authorize continued spending for routine operations. Republican leaders have been considering these pressure points as ways to force spending cuts on the White House.

House Speaker John A. Boehner (R-Ohio) and his GOP leadership team convened behind closed doors over the weekend to draft a strategy to discuss with rank-and-file lawmakers this week.

Boehner's task is complicated by a rowdy conservative wing that has diminished his ability to control the House Republican majority. Having stomached tax increases in the year-end "fiscal cliff" deal, many conservative Republicans are primed to win major spending cuts and are willing to take drastic action.

"The debt limit is one of the last stop signs left in Washington, and Congress should use it to force the president to enact tax and spending reform," conservative Rep. Tom Graves (R-Ga.) said in a statement.

Yet some more moderate voices that are influential with the GOP, including the U.S. Chamber of Commerce, have warned against another debt ceiling fight to avoid the potential catastrophic risk of a default.

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