The president endorsed a Senate Democratic plan unveiled Monday that would save $2.7 trillion in spending over 10 years in exchange for raising the federal debt ceiling through 2012. He rejected a competing House Republican plan that could save up to $3 trillion while raising the debt ceiling in two stages — the first lasting six months.
Obama reserved his harshest words for House Republicans as he called on them to join him in breaking a “stalemate” and forging a compromise that balances cuts in government spending with new tax revenues from the wealthy and corporations.
“The only reason this balanced approach isn’t on its way to becoming law right now is because a significant number of Republicans in Congress are insisting on a cuts-only approach – an approach that doesn’t ask the wealthiest Americans or biggest corporations to contribute anything at all,” Obama said in the East Room of the White House.
In a response following the president’s statement, House Speaker John Boehner (R-Ohio) said Republicans had fought to rein in the national debt, but that Obama had refused to compromise.
“I want you to know I made a sincere effort to work with the president to identify a path forward,” Boehner said. “Unfortunately, the president would not take yes for an answer. Even when we thought we might be close on an agreement, the president’s demands changed.”
“The president has often said we need a ‘balanced’ approach -- which in Washington means: we spend more. . .you pay more,” the speaker said. “Having run a small business, I know those tax increases will destroy jobs.”
At the same time, Boehner acknowledged that the debt ceiling must be raised and said he would press on with the Republican plan that Obama rejected. “The United States cannot default on its debt obligations,” Boehner said.
“The solution to this crisis is not complicated: If you’re spending more money than you’re taking in, you need to spend less of it,” he said. “I’ve always believed, the bigger [the] government, the smaller the people.”
In his remarks, Obama acknowledged that most people outside Washington might not be familiar with the particulars of the debt debate, and he told Americans what might happen if the debt ceiling is not raised.
“For the first time in history, our country’s Triple A credit rating would be downgraded, leaving investors around the world to wonder whether the United States is still a good bet,” Obama said. “Interest rates would skyrocket on credit cards, mortgages, and car loans, which amounts to a huge tax hike on the American people. We would risk sparking a deep economic crisis – one caused almost entirely by Washington.”
“I’m asking you all to make your voice heard,” Obama said. “If you want a balanced approach to reducing the deficit, let your Member of Congress know.”
Obama’s speech came with just about a week before the Treasury Department has said the government will need to borrow more money to pay for all its obligations. The administration has warned of catastrophic default on government obligations if the debt ceiling is not raised by Aug. 2.