Obama urges deal on debt ceiling talks

Washington (CNN) -- President Barack Obama called on lawmakers Wednesday to overcome the "selfish" norms of politics and "do their job" in order to strike a deal on raising the federal government's current $14.3 trillion debt ceiling by the start of August.

People shouldn't get "spooked," but "the yellow light is flashing," he warned. "This is urgent."

Top economic analysts have warned of potentially catastrophic economic consequences if the ceiling is not raised by August 2, including skyrocketing interest rates and a plummeting U.S. dollar.

The president blasted congressional Republicans for refusing to consider raising taxes on the wealthiest Americans as part of any deal. Congress needs to be willing to "take on their sacred cows and do tough things" while moving away from "maximalist positions," he said.

He said Congress should cancel upcoming summer vacations if a deal isn't struck by the end of the week.

var currExpandable = "expand15";if(typeof CNN.expandableMap === 'object') {CNN.expandableMap.push(currExpandable);}var currExpandableHeight = 360;mediaObj.lgImage= $(currExpandable).select('img.box-image')[0].readAttribute('src');mediaObj.lgImageX = 640;mediaObj.lgImageY = currExpandableHeight;mediaObj.origImageX = $(currExpandable).select('img.box-image')[0].readAttribute('width'); mediaObj.origImageY = $(currExpandable).select('img.box-image')[0].readAttribute('height');mediaObj.contentType = 'Video';CNN.expElements.expand15Store = mediaObj;var currExpandable = "expand25";if(typeof CNN.expandableMap === 'object') {CNN.expandableMap.push(currExpandable);}var currExpandableHeight = 360;mediaObj.lgImage= $(currExpandable).select('img.box-image')[0].readAttribute('src');mediaObj.lgImageX = 640;mediaObj.lgImageY = currExpandableHeight;mediaObj.origImageX = $(currExpandable).select('img.box-image')[0].readAttribute('width'); mediaObj.origImageY = $(currExpandable).select('img.box-image')[0].readAttribute('height');mediaObj.contentType = 'Video';CNN.expElements.expand25Store = mediaObj;var currExpandable = "expand35";if(typeof CNN.expandableMap === 'object') {CNN.expandableMap.push(currExpandable);}var currExpandableHeight = 360;mediaObj.lgImage= $(currExpandable).select('img.box-image')[0].readAttribute('src');mediaObj.lgImageX = 640;mediaObj.lgImageY = currExpandableHeight;mediaObj.origImageX = $(currExpandable).select('img.box-image')[0].readAttribute('width'); mediaObj.origImageY = $(currExpandable).select('img.box-image')[0].readAttribute('height');mediaObj.contentType = 'Video';CNN.expElements.expand35Store = mediaObj;var currExpandable = "expand45";if(typeof CNN.expandableMap === 'object') {CNN.expandableMap.push(currExpandable);}var currExpandableHeight = 360;mediaObj.lgImage= $(currExpandable).select('img.box-image')[0].readAttribute('src');mediaObj.lgImageX = 640;mediaObj.lgImageY = currExpandableHeight;mediaObj.origImageX = $(currExpandable).select('img.box-image')[0].readAttribute('width'); mediaObj.origImageY = $(currExpandable).select('img.box-image')[0].readAttribute('height');mediaObj.contentType = 'Video';CNN.expElements.expand45Store = mediaObj;

"I've been here," he said. "Let's get it done."

Obama made his remarks during a wide-ranging news conference covering the state of the economy, the wars in Afghanistan and Libya, and hot-button social issues such as same-sex marriage. It came at a time of rising questions over Obama's ability to maintain control of the political narrative and boost public confidence in his stewardship in the run-up to next year's presidential election.

GOP leaders showed no signs of yielding in their opposition to higher taxes as part of any grand bargain with the White House. Recent bipartisan talks led by Vice President Joe Biden collapsed over the tax disagreement.

Senate Minority Leader Mitch McConnell, R-Kentucky, took to the Senate floor before the start of Obama's news conference to declare that Republicans will "refuse to let the taxpayers take the hit when it comes to reducing the debt."

The debate is "about holding Washington accountable for a change," McConnell said. "It's about drawing a line in the sand and saying, no, the taxpayers will not bail out politicians. It's about refusing to subsidize the Democrats' irresponsible spending habits another day."

For his part, the president ripped Republicans for protecting "millionaires and billionaires," oil companies, hedge fund managers, and owners of corporate jets. The wealthy, he said, can afford to pay higher taxes.

"You can still ride on your corporate jet. You're just going to pay a little more," Obama said.

At the same time, the president pushed Congress to act on a series of pending measures to help strengthen the economy faster, including easing the ability of entrepreneurs to get patents, providing loans to private companies for infrastructure development, and approving free trade agreements.

Obama noted that America's economy has gone through a series of major structural changes.

As a result, the country's economic problems are "not going to be solved overnight," he stressed.

Turning his attention overseas, Obama dismissed criticism that his administration failed to obtain clear congressional approval before committing U.S. military forces to the NATO-led campaign in Libya.

Some representatives and senators on both sides of the aisle argue the White House has violated the 1973 War Powers Resolution, which gives a president 60 days to get congressional approval for sending U.S. forces to war, followed by a 30-day extension to end hostilities.

The combined 90-day period ended last week.

Obama insisted that the War Powers Resolution does not apply in the case of Libya.

The law was intended to avoid a repeat of a Vietnam-style war, he said. In contrast, "this operation is limited in time and in scope."

"We have engaged in a limited operation to help a lot of people against one of the worst tyrants in the world," the president said. "A lot of this fuss" over the U.S. intervention in Libya "is politics."

"We have done exactly what I said we would do" in Libya, Obama argued. America's allies "have carried a big load when it comes to these NATO operations" while "we've sent reams of information" to Capitol Hill.

"The noose is tightening" around longtime Libyan strongman Moammar Gadhafi, he asserted.

Obama's argument echoed those made Tuesday by Harold Koh, a top State Department legal adviser, who argued before the Senate Foreign Relations Committee that the law does not apply to American forces in Libya because the U.S. mission is limited in terms of its scope, means, exposure of forces, and chances of escalation.

In short, administration officials believe the U.S. role in Libya does not meet the law's definition of hostilities.

Obama, however, overruled contrary legal opinions put forward by both the Pentagon and the Justice Department's Office of Legal Counsel in declining to seek congressional authorization, according to the New York Times.

Turning to the debate over same-sex marriage, the president refused to provide new specifics about his personal opinion. He has indicated in the past that his views on the matter are "evolving."

He noted, however, that his administration has stopped defending the federal Defense of Marriage Act against legal challenges.

Obama argued it is up to states to determine if they will legalize same-sex marriage, as New York recently did.

"The president, I've discovered since I've been in office, can't dictate precisely how this process moves," the president said.

The nation is "moving toward greater equality," Obama added. "I think that's a good thing."

CNN

U.S. hits debt ceiling

The tap dance begins: Treasury Secretary Geithner said he can move money around to keep U.S. out of default until Aug. 2.

NEW YORK (CNNMoney) -- It's official: The U.S. government hit the debt ceiling on Monday, Treasury Secretary Timothy Geithner told Congress.

Geithner said he would have to suspend investments in federal retirement funds until Aug. 2 in order to create room for the government to continue borrowing in the debt markets.

The funds will be made whole once the debt limit is increased, Geithner said. "Federal retirees and employees will be unaffected by these actions."

He went on to urge Congress once again to raise the country's legal borrowing limit soon "to protect the full faith and credit of the United States and avoid catastrophic economic consequences for citizens."

Congress, meanwhile, is not showing any signs of budging. Many Republicans and some Democrats say they won't raise it unless Congress and President Obama agree to significant spending cuts and other ways to curb debt. (Social Security and Medicare squeezed)

Geithner told Congress that he estimates he has enough legal hoop-jumping tricks to cover them for another 11 weeks or so.

But then he said that's it. If lawmakers don't get it together by Aug. 2, the United States will no longer be able to pay its bills in full. (Slashing spending alone won't cut it)

The rhetoric about whether to raise the ceiling and under what conditions has been loud, harsh and, at times, misleading. Exasperatingly, it's far from over.

What is the debt ceiling exactly? It's a cap set by Congress on the amount of debt the federal government can legally borrow. The cap applies to debt owed to the public (i.e., anyone who buys U.S. bonds) plus debt owed to federal government trust funds such as those for Social Security and Medicare.

The first limit was set in 1917 and set at $11.5 billion, according to the Center for a Responsible Federal Budget. Previously, Congress had to sign off every time the federal government issued debt. (Take CNNMoney's deficit quiz)

How high is the debt limit right now? The ceiling is currently set at $14.294 trillion. Based on Treasury's announcement, it hit that mark on Monday morning.

And by taking various extraordinary measures like suspending investments in federal retirement funds, Geithner will be able to bring total debt down enough to allow the government to continue borrowing until Aug. 2.

How is the ceiling determined? They don't admit it, but lawmakers tacitly agree to raise the debt ceiling every time they vote for a spending hike or tax cut.

"Congress has already passed and the president has already signed legislation that increases spending or decreases revenues. Those decisions have already been made," said Susan Irving, director for federal budget issues at the Government Accountability Office.

So in reality arguing over the debt ceiling is essentially arguing over whether to pay the bills the country has already incurred.

But politicians who make a stink about the debt ceiling will always try to make the case that the guy who votes to raise it is a fiscal spendthrift.

And politics, of course, permeates the whole debate. Lawmakers who want to make hay of the issue for political gain may push for a small increase so the debate comes up again soon. Others may want a bigger increase so they don't have to revisit the issue for awhile.

How many times has the ceiling been raised? Since March 1962, the debt ceiling has been raised 74 times, according to the Congressional Research Service. Ten of those times have occurred since 2001.

Expect more of the same over the next decade. Barring major changes to spending and tax policies, "Congress would repeatedly face demands to raise the debt limit," CRS wrote.

Why does Congress even bother to set a debt limit? In theory, the limit is supposed to help Congress control spending. In reality, it doesn't.

Every time the debt limit needs to be raised, lawmakers and the president are forced to take stock of the country's fiscal direction, which isn't a bad thing necessarily.

But the decision about how high to set the ceiling is divorced from lawmakers' decisions to pass spending hikes and tax cuts. It's also made after the fact, so it doesn't do much to pull in the purse strings.

That's why budget experts say it would be better to tie the debt limit decision to lawmakers' legislative actions.

What happens if Congress doesn't raise the debt ceiling before Aug. 2? No one knows for sure. But the going assumption is that no good can come of it.

Treasury would not have authority to borrow any more money. And that can be a problem since the government borrows to make up the difference between what it spends and what it takes in. It uses that borrowed money to help fund operations and pay creditors.

Geithner's critics say he could prevent default by simply paying the interest due to bondholders.

But since average spending -- minus interest -- outpaces revenue by about $118 billion a month, Geithner won't be able to pay all the country's bills.

That means he will have to pick and choose who to pay and who to put off every day. And there's no guarantee that paying interest while shirking other legal obligations will protect the country from the perception of default.

Geithner said it would be akin to a homeowner who pays his mortgage but puts off his car loan, credit cards, insurance premiums and utilities. The mortgage is taken care of, but the homeowner's credit could still be damaged.

Ultimately, if lawmakers fail to raise the ceiling this year, they will have two choices, both awful.

They could either cut spending or raise taxes by several hundred billion dollars just to get through Sept. 30, which is the end of the fiscal year. Or they could acknowledge that the country would be unable to pay what it owes in full and the United States could effectively default on some of its obligations.

The first option would be impossible to execute without serious economic repercussions.

And the second option could cripple the economy and send world markets into a tailspin.

"Not only the default but efforts to resolve it would arguably have negative repercussions on both domestic and international financial markets and economies," according to the CRS.

At a minimum, a default could hurt U.S. bonds, the dollar and investors' portfolios. "Our bond market and stock market would crash," said former Congressional Budget Director Rudolph Penner.

Will reaching the debt ceiling for good cause a government shutdown? Not technically.

A government shutdown occurs if lawmakers fail to appropriate money for federal agencies and programs.

By contrast, if the debt ceiling is breached, Uncle Sam would still have revenue coming in that could be used to fund the government, Penner noted.

But if Geithner is coming up short by $118 billion every month, and lawmakers just decide to cut spending by that amount, that could effectively mean a partial government shutdown. 

First Published: May 16, 2011: 5:18 AM ET

CNN Top Stories

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

Democrats Join Threat to Hold Up Debt Ceiling Vote Without Spending Cuts

Reuters

In this June 12, 2010 photo, Sen. Mark Pryor speaks at a media conference at a command center near Caddo Gap, Ark.

President Obama is starting to feel pressure from his own party to tie spending cuts to a vote to raise the debt limit, even as the administration expresses confidence that Congress will ultimately raise the cap. 

The latest moderate Democrat to draw a line in the sand is Sen. Mark Pryor, D-Ark., who told members of a local political group Wednesday that he'll need to see a commitment to cut spending and overhaul the tax code in order to vote to raise the $14.3 trillion cap. The government is expected to reach that ceiling by mid-May. 

"What I've told anyone who will listen to me in Washington, including my leadership, is that I'm not going to vote for that unless there is a real and meaningful commitment to debt reduction," Pryor told the Political Animals Club at its monthly meeting at the governor's mansion. 

Pryor said he believed the upcoming vote on the debt limit would prove whether lawmakers in Washington have the political will to begin addressing government spending. Meanwhile, three Democrats and three Republicans in the Senate are trying to strike an agreement by early May that would call for spending cuts, as well as changes in the tax code, over the next decade. 

Treasury Secretary Tim Geithner suggested in interviews last weekend that bipartisan congressional leaders have assured the White House they would vote to raise the limit absent a deficit-reduction agreement. Geithner described such an agreement as necessary, but argued that it should not be tied to the debt vote as the possibility of not raising the cap is too fraught with financial risk. 

Republicans, though, continue to demand some semblance of a commitment to cut spending as a condition for their support. And a handful of Democrats have started to tiptoe over to their side. 

After Obama outlined a deficit-reduction plan a week ago, Sen. Joe Manchin, D-W.Va., said he needs to make sure the government is not paying for a "blank check" with borrowed money. 

"So let me also continue to be clear about my position on the debt ceiling," he said in a statement. "I strongly believe we must adopt a long-term, responsible and realistic fiscal plan that reflects our values and defines priorities, or I will vote against raising the debt ceiling." 

Reps. Mike Ross, D-Ark., and Dan Boren, D-Okla., leaders of the fiscally conservative Blue Dog Coalition in the House, also suggested in an interview with Fox News two months ago that members of their group would balk at the vote unless they see "significant cuts." 

"We can't default on our loans," Ross said at the time. "There's going to be a compromise, though." 

Administration officials and Democratic congressional leaders have warned of catastrophic consequences if Congress fails to raise the ceiling. The Treasury Department could avoid hitting the ceiling for several weeks beyond the projected mid-May deadline by employing some last-resort measures, but officials warn that eventually benefits payments would stop and the country would default. 

A number of Democrats in the rank-and-file have echoed those concerns. Dozens of House members have signed on to a letter from Rep. Peter Welch, D-Vt., calling for a "clean extension of the debt ceiling." 

"The debt ceiling vote is about one thing -- affirming that America pays its bills," they wrote, noting that the vote would not automatically authorize new spending, but rather allow the country to pay off existing obligations. 

Pryor, though, said the debt ceiling vote would have to coincide with a plan that includes spending cuts, major tax code changes and efforts to grow the nation's economy. He said every program will have to experience some cuts. 

"Everybody's going to have a cut, no matter how worthy your program is or how much wise you'll be with the money or the great things you'll do. Get ready, because everything's going to get cut," Pryor said. 

Pryor also faulted both parties for their approach to tax policy. 

"Democrats think that if we can just raise enough taxes on millionaires, we can solve our problems. Republicans think if we never raise another tax for any reason under any circumstance ever again, we'll solve all our problems," Pryor said. "The truth is, the math doesn't add up for either of those positions. What we need is real tax reform. There's a ton of inequity in our tax code." 

Pryor said he believed the debt commission appointed by Obama has provided a guide for lawmakers as they address the issue. That commission issued its recommendations, which included a mix of spending cuts and tax increases, but fell short of the votes needed to forward the recommendations on to Congress. 

Under the commission's recommendations, about $4 trillion would be slashed from the budget over the coming decade -- three-fourths of it through spending cuts and the other fourth from higher taxes. Pryor said he believed the so-called gang of six senators working on a bipartisan compromise is looking at those recommendations as a guide. 

"My sense is they'll take the debt commission's recommendations and they'll overlay that on top of the federal budget," Pryor said. 

Pryor, however, said he's not on board with every recommendation from the commission. For example, he said he wouldn't support the commission's recommendation to eliminate the mortgage interest deduction on federal income tax. 

The Associated Press contributed to this report.

Print Email Share Comments Recommend Tweet View ArticleLeave a CommentSort: NewestSort: Oldest Please enable JavaScript to view the comments powered by Disqus. You must login to comment.

View Article

View All Comments

Latest Politics VideosMore »

View the Original article

DeMint Threatens Filibuster on Debt Ceiling Vote

Sen. Jim DeMint talks with reporters near the Senate floor on Capitol Hill Dec. 22, 2010.

Throwing down the gauntlet, Republican Sen. Jim DeMint threatened Monday to block a vote in Congress on raising the U.S. debt ceiling unless he wins a balanced-budget amendment to the Constitution. 

The filibuster threat comes a day after Treasury Secretary Tim Geithner suggested Republican leaders had offered private assurances to the White House that they ultimately would vote to raise the $14.3 trillion ceiling, regardless of whether a deal is reached on long-term spending cuts. 

Publicly, Republicans say they will demand spending cuts as a condition for supporting a hike in the debt ceiling. They stood by that claim following Geithner's comments, and DeMint took their demands a step further. 

"I will oppose any attempt to vote to raise the limit on our $14 trillion debt until Congress passes the balanced-budget amendment," the South Carolina conservative said. He first made the remarks to McClatchy, which his office confirmed to Fox News. 

A balanced-budget amendment would prohibit the U.S. government from running a deficit. Such a provision would take a two-thirds vote in Congress, in addition to ratification by the states. 

White House spokesman Jay Carney did not address DeMint's threat directly during his briefing with reporters on Monday, but he did say that the "cleanliness" of the bill -- in other words, that there are no policy attachments to it -- is not an issue. 

"The issue here is the debt ceiling has to be raised, and it cannot be held hostage to a process that is very complicated and difficult," he said. "We hope we will reach an agreement on deficit reduction -- a bipartisan agreement on deficit reduction within the time frame. We believe that's possible."

All GOP senators already have signed onto a balanced-budget amendment proposal, reviving a push from the mid-'90s -- when the House approved such an amendment, and the Senate fell one vote short of doing the same. 

DeMint's demand, though, goes beyond those of other Republicans who say they just want to see a serious plan for closing the deficit as a condition for support on a debt-limit increase. 

Sen. Tom Coburn, R-Okla,, said on "Fox News Sunday" that he needs to have "absolute certainty" a deficit reduction plan includes "critical changes." 

"Unless we do that, there's no way I'll support it," Coburn said on the debt ceiling increase. 

Sen. Rand Paul, R-Ky., on CNN's "State of the Union," said it's "yet to be determined" whether he would support a filibuster on the debt ceiling vote. 

Rep. Chris Van Hollen, D-Md., though, said Congress should not "monkey around with the full faith and credit of the United States." 

"Linking the two and saying you're only going to vote for the debt ceiling if something particular happens on deficit reduction I think is playing Russian roulette with, like, the fully loaded revolver," he said on "Fox News Sunday." 

Geithner said repeatedly Sunday that lawmakers who want to take the country to the "brink" will bear the responsibility for the risk that creates. 

He suggested that merely flirting with that edge would create a problem. But he said if Congress ultimately rejects an increase in the debt limit, it would trigger a crisis that makes that 2008 meltdown look tame. Geithner reiterated warnings that such a vote would force the government to halt benefits payments to seniors and veterans and would risk the government defaulting on its interest.

Print Email Share Comments Recommend Tweet View ArticleLeave a CommentSort: NewestSort: Oldest Please enable JavaScript to view the comments powered by Disqus. You must login to comment.

View Article

View All Comments

Latest Politics VideosMore »

View the Original article

Obama Calls His Senate Vote Against Lifting Debt Ceiling a Mistake

Associated Press

Print Email Share Comments Recommend Tweet

President Obama says his vote as a senator in 2006 against raising the debt limit was a mistake motivated by politics.

Obama also says Senate Democrats will bear the burden this time around when Congress votes on whether to lift the cap.

The U.S. will hit its debt limit of $14.3 trillion by May 16. The government could be thrown into default if Congress doesn't raise the limit by then or soon after.

Republicans who control the House are demanding that Obama agree to major spending cuts in exchange for their votes.

Obama told ABC News on Thursday that no senator likes to be tagged as voting to increase the debt limit. But as president, he says he has a different perspective on the consequences.

Print Email Share Comments Recommend Tweet View ArticleLeave a CommentSort: NewestSort: Oldest Please enable JavaScript to view the comments powered by Disqus. You must login to comment.

View Article

View All Comments

Latest Politics VideosMore »

View the Original article