President Clinton stepped up the rhetoric Monday and warned congressional Republicans not to play chicken with the federal budget.
“I am not going to be blackmailed,” Clinton said, attacking House Speaker Newt Gingrich’s pledge to block legislation raising the national-debt ceiling if the administration doesn’t accept GOP budget proposals. “We can balance the budget, but blackmail is not the way to do it.”
One week before the start of a new fiscal year, Congress and the White House are engaged in a three-tier budget confrontation: first, on each of the 13 appropriations bills to fund the federal government, including eight the president has promised to veto; second, to reconcile tax and entitlement provisions, including welfare, Medicare and Medicaid; and third, to lift the debt ceiling from its current $4.9 trillion limit. Approximately $25 billion in U.S. Treasury bills come due around Nov. 15, and the government cannot repay them without borrowing beyond the $4.9 trillion limit.
The government has never defaulted on its debt, and most analysts say a default would trigger turmoil in the world financial markets and raise interest rates. Thursday, Gingrich, R-Ga., threatened not even to schedule a vote on the bill to lift the limit. Administration officials criticized the rhetoric, and even Federal Reserve Chairman Alan Greenspan, a Republican, said Friday, “The issue of default should not be on the table.” Unfazed, Gingrich repeated his vow Sunday night.
The president warned Monday that the threat was not necessary or worth the consequences. “We can balance the budget … the entire financial world thinks (that) is a great thing. But it has to be done in an honorable way, and defaulting on our debts is not an honorable way to do it,” he said.
“The cost of carrying our debt, the interest rates, would be raised, and that would make it harder to balance the budget,” Clinton said. “It’s ultimately self-defeating, and it’s wrong, and it’s irresponsible, and it’s not necessary.”
Clinton’s remarks came during a luncheon meeting with Washington reporters. Flush from a busy week of heavy campaigning and fund raising in five voter-rich states, Clinton celebrated U.S.-brokered foreign policy achievements in the Mideast (an Israeli-Palestinian treaty for future control of the West Bank will be signed Thursday) and in Bosnia (negotiators meet at the United Nations this week to hammer out an interim accord).
He would not discuss the soaring national interest in retired Gen. Colin Powell (“That’s your job, not mine”), but devoted much energy to explaining his sense of the national psyche, which he has characterized as a national funk. Anxious to avoid the trap that engulfed Jimmy Carter when he declared a state of national malaise in 1979, Clinton said he should have chosen his words better.