Obama: Debt limit fight imperils elderly’s checks

ANDREW TAYLOR

JIM KUHNHENN

Asso­ci­ated Press

WASHINGTON — Declar­ing “we are not a dead­beat nation,” Pres­i­dent Obama warned on Mon­day that Social Secu­rity checks and vet­er­ans’ ben­e­fits will be delayed if con­gres­sional Repub­li­cans fail to increase the government’s bor­row­ing author­ity in a loom­ing show­down over the nation’s debt and spending.

Obama said he was will­ing to nego­ti­ate deficit reduc­tion with GOP lead­ers but insisted that those talks be sep­a­rate from deci­sions to raise the $16.4 tril­lion debt ceil­ing and avert a pos­si­ble first-ever national default.

“They will not col­lect a ran­som in exchange for not crash­ing the Amer­i­can econ­omy,” Obama said in a news con­fer­ence one week before he is sworn in for a sec­ond term. “What I will not do is to have that nego­ti­a­tion with a gun at the head of the Amer­i­can people.”

Bit­ter brinkman­ship between the White House and con­gres­sional Repub­li­cans over spend­ing has become a defin­ing event over the past four years, test­ing both Obama’s lever­age and his resolve at dif­fer­ent moments of his pres­i­dency. House Speaker John Boehner brushed off Obama’s insis­tence on sep­a­rat­ing the debt ceil­ing from nego­ti­a­tions over spend­ing cuts.

“The Amer­i­can peo­ple do not sup­port rais­ing the debt ceil­ing with­out reduc­ing gov­ern­ment spend­ing at the same time,” Boehner said. “The con­se­quences of fail­ing to increase the debt ceil­ing are real, but so, too, are the con­se­quences of allow­ing our spend­ing prob­lem to go unresolved.

Under­scor­ing the urgency, Trea­sury Sec­re­tary Tim­o­thy Gei­th­ner said in a let­ter to Boehner on Mon­day that the gov­ern­ment will exhaust its bor­row­ing limit as soon as mid-February, ear­lier than expected. The Trea­sury has been using book­keep­ing maneu­vers to keep from sur­pass­ing the debt ceil­ing, but Gei­th­ner said those mea­sures will be exhausted by mid-February to early March.

In addi­tion to not­ing pos­si­ble effects on older Amer­i­cans and vet­er­ans, Obama recited a litany of pos­si­ble con­se­quences if Con­gress fails to raise the debt ceil­ing, includ­ing send­ing the econ­omy back into recession.

“We might not be able to pay our troops, or honor our con­tracts with small busi­ness own­ers,” he said. “Food inspec­tors, air traf­fic con­trollers, spe­cial­ists who track down loose nuclear mate­ri­als 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, 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.”

At this moment, the gov­ern­ment faces three loom­ing dead­lines: The debt limit must be raised soon to meet spend­ing oblig­a­tions and pre­vent a first-ever default, a series of across-the-board spend­ing cuts is to kick in on March 1, and fund­ing for most gov­ern­ment pro­grams will run out on March 27.

After Obama won tax rate increases for wealth­ier Amer­i­cans dur­ing bud­get nego­ti­a­tions last month, Repub­li­cans became dou­bly deter­mined to win spend­ing cuts. They see the con­flu­ence of events ahead of April 1 as their best opportunity.

Just weeks from hit­ting the first of the dead­lines, the two sides are nei­ther on the same page nor pur­su­ing a com­mon approach. In 2011, Obama and Boehner at least started off agree­ing on the premise that the increase in the debt limit be matched dollar-for-dollar with deficit cuts, spread out over a decade. Obama ulti­mately won a $2.1 tril­lion debt increase, but only after agree­ing to an equal amount of spend­ing cuts over 10 years.

This time, White House offi­cials believe the pres­i­dent has a stronger hand, hav­ing won re-election and, at least par­tially, the tax increases on which he had campaigned.

Eager to avoid blame for a default or for missed pay­ments to seniors, some Repub­li­cans are get­ting ready to insist on cer­tain pay­ment pri­or­i­ties by the Obama admin­is­tra­tion if the debt ceil­ing is not raised in a timely manner.

Even with­out addi­tional bor­row­ing author­ity, the gov­ern­ment would con­tinue to receive tax rev­enue, but hardly enough to keep up with the bills.

Sen. Patrick Toomey, R-Pa., says he will intro­duce leg­is­la­tion next week that would require the gov­ern­ment to pay inter­est on the debt as well as Social Secu­rity ben­e­fits and wages for active duty mem­bers of the mil­i­tary if the bor­row­ing limit is not raised.

“Because the peo­ple who want to keep spend­ing as usual and don’t want to nego­ti­ate some spend­ing reduc­tions are out there prop­a­gat­ing this myth that some­how fail­ure to raise the debt ceil­ing would result in a default, I felt like it’s nec­es­sary to demon­strate and, in fact I pre­fer to cod­ify, the alter­na­tive,” Toomey said in an interview.

Con­gres­sional Democ­rats have recently urged the pres­i­dent to lift the debt limit uni­lat­er­ally. He said — as he has before — that he won’t do it, that Con­gress has voted for the spend­ing that resulted in fed­eral bor­row­ing, and should now agree to pay the bill.

“There are no magic tricks here,” Obama said Mon­day. “There are no loop­holes. There are no, you know, easy outs.”

Obama noted that com­bined with other leg­is­la­tion he signed ear­lier in his term, he and Con­gress have reduced deficits by about $2.5 tril­lion over a decade, short of the $4 tril­lion he said is nec­es­sary to get them down to a man­age­able size.

He insisted that in nego­ti­at­ing deficit reduc­tions, both spend­ing lim­its and tax rev­enue increases need to be on the table. Aides have said that clos­ing loop­holes and plac­ing lim­its on deduc­tions could gen­er­ate about $600 bil­lion in new rev­enue. He added that he is “open to mak­ing mod­est adjust­ments to pro­grams like Medicare to pro­tect them for future generations.”

One option for Boehner is to pack­age a debt limit increase together with a full cat­a­log of spend­ing cuts and try to pass it through the House. That could prove enor­mously chal­leng­ing since he would have to accom­plish the feat exclu­sively with GOP votes — and some con­ser­v­a­tive hard-liners sim­ply refuse to approve any debt increase.

Boehner has made it clear that he’s eager to avoid a first-ever default on U.S. oblig­a­tions — even if some Repub­li­cans aren’t afraid of the idea.

In one sign of flex­i­bil­ity, a Boehner spokesman says that though there is the so-called Boehner Rule requir­ing $1 in spend­ing cuts for every $1 in increased author­ity to issue gov­ern­ment debt, the speaker is will­ing to apply it more leniently to include sav­ings from “reforms” to enti­tle­ment pro­grams like Medicare and Social Secu­rity that accrue over the long term.

Obama has his doubters, who note that he has com­pro­mised before in the face of last-minute deadlines.

Asked dur­ing the news con­fer­ence how stead­fast he was, Obama replied: “We’ve got to break the habit of nego­ti­at­ing through cri­sis over and over again. Now is as good a time as any, at the start of my sec­ond term. Because if we con­tinue down this path, then there’s really no stop­ping the principle.”

Posted by AP News on Jan 14 2013. You can follow any responses to this entry through the RSS Feed. Comments can be made below.