“If congressional Republicans refuse to pay America’s bills on time, Social Security checks and veterans benefits will be delayed. We might not be able to pay our troops,” Obama said, ratcheting up the rhetoric over the looming deadline to raise the $16.4 trillion debt ceiling.
“Investors around the world will ask if the United States is, in fact, a safe bet. Markets could go haywire,” he said. “It would be a self-inflicted wound on the economy. It would slow down our growth, might tip us into recession. And ironically it would probably increase our deficit.”
Obama added: “To even entertain this happening — of the United States of America not paying its bills — is irresponsible. It’s absurd.” He vowed that congressional Republicans “will not collect a ransom in exchange for not crashing the American economy. The financial well-being of the American people is not leverage to be used. The full faith and credit of the United States of America is not a bargaining chip.”
Obama said he still wanted to reach a compromise to stabilize borrowing over the long term but that willingness to negotiate does not extend to the debt ceiling, which covers obligations that Congress has already incurred.
“If we combine a balanced package of savings from health care and revenues from closing loopholes, we can solve the deficit issue,” Obama said. The American people “made a clear decision about the approach they prefer.... They don’t think it’s smart to protect endless corporate loopholes and tax breaks for the wealthiest Americans rather than rebuild our roads and our schools, invest in our workers’ skills, or help manufacturers bring jobs back to America.”
Obama said he was happy to talk to Republicans about ways to reduce the deficit. “What I will not do,” he said, “is to have that negotiation with a gun at the head of the American people — the threat that unless we get our way, unless you gut Medicare or Medicaid, or, you know, otherwise slash things that the American people don’t believe should be slashed, that we’re going to threaten to wreck the entire economy. That is not how historically this has been done. That’s not how we’re going to do it this time.”
Less than a week before Obama is inaugurated for a second term, the comments set up a collision course with Republicans, who insist that the debt-ceiling debate offers a crucial source of leverage to force spending cuts. Without a resolution, the U.S. and global economies face serious risks.
“The president and his allies need to get serious about spending, and the debt-limit debate is the perfect time for it,” Senate Minority Leader Mitch McConnell (R-Ky.) said in response to Obama’s remarks. “I do know that the most important issue confronting the future of our country is our deficit and debt.”