Obama warns Republicans against debt showdown
AGENCE FRANCE PRESSE WASHINGTON,
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PRESIDENT Barack Obama on Monday warned Republicans against using the debt ceiling as a “bargaining chip,” saying a failure to raise it would sow financial chaos and send markets into a tailspin. “To even entertain the idea of this happening, of the US not paying its bills—it is irresponsible, it is absurd,” Obama said, repeating his demand for a rise in the nation’s borrowing limit. “We are not a deadbeat nation,” the president said in the final press conference of his first White House term. “While I’m willing to compromise and find common ground over how to reduce our deficits, America cannot afford another debate with this Congress about whether or not they should pay the bills they’ve already racked up.” Congressional refusal to raise the debt limit beyond its current level of $16.4 trillion could delay key government payments, including Social Security checks and veterans benefits, paychecks to troops, air traffic controllers and the honoring of contracts with small businesses. It could also result in another downgrade of the US credit rating, with potentially severe consequences for the global economy. “Investors around the world will ask if the US is in fact a safe bet,” Obama said. “Markets could go haywire, interest rates would spike for anybody who borrows money. It would be a self-inflicted wound on the economy.” The US ran up against its current debt limit at the end of 2012, but the government is using ‘extraordinary measures’ to extend the limit until late February. Outgoing Treasury Secretary Timothy Geithner also called on Congress to raise the debt limit, warning that failing to do so would “impose severe economic hardship on millions of individuals and businesses.” “Threatening to undermine our creditworthiness is no less irresponsible than threatening to undermine the rule of law, and no more legitimate than any other common demand for ransom,” he wrote in a letter to House Speaker John Bœhner. US Federal Reserve Chairman Ben Bernanke also waded into the debate, telling a university forum it was “very, very important that Congress take the necessary action to raise the debt ceiling.” Obama said any potential solution lies with the Republican House leadership, some of whose members have demanded that any rise in the debt ceiling be matched dollar for dollar with deep spending cuts. Lawmakers can “act responsibly, and pay America’s bills, or they can act irresponsibly and put America through another economic crisis,” Obama said. Republicans reacted swiftly, essentially ignoring Obama’s demand to decouple the spending debate from the debt ceiling and giving every indication that the face-off will continue.
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