WASHINGTON – Declaring “we are not a deadbeat nation,” President Barack 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.”
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.
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.”