Obama decries debt stalemate
7/26/2011
An impatient President Obama addressed the American people on TV.
WASHINGTON -- With the deadline for raising the nation's debt limit and prospects for financial-market panic now a week away, an impatient, frustrated President Obama warned the nation last night that the partisan impasse risks "sparking a deep economic crisis, this one caused almost entirely by Washington."
But House Speaker John Boehner of Ohio, presenting the case for the Republicans, countered that "the solution to this crisis is not that complicated. If you're spending more money than you're taking in, you need to spend less of it."
Mr. Obama and the Democrats should accept the spending cut package pushed by the GOP, Mr. Boehner said -- but Mr. Obama, he charged, "wants a blank check today."
Mr. Obama's 15-minute nationally televised address capped a day when Senate Democrats' and House Republicans' positions hardened, as each group unveiled deficit-cutting plans yesterday that showed the two sides remain sharply divided.
The key conflict dividing the new Republican and Democratic congressional plans involved the length of any new debt-limit increase. Republicans in the House of Representatives want to raise it in two stages, the first a short-term stopgap that would last through early next year. Democrats want a new ceiling that will last until after the 2012 election.
Mr. Obama got specific in criticizing the House GOP plan offered earlier yesterday by Mr. Boehner.
"A six-month extension of the debt ceiling might not be enough to avoid a credit downgrade and the higher interest rates that all Americans would have to pay as a result," he said. "We know what we have to do to reduce our deficits; there's no point in putting the economy at risk by kicking the can further down the road."
Mr. Obama said he remains confident that an accord will be reached, saying, "Republican leaders and I have found common ground before." He called on viewers to urge their lawmakers to compromise.
Related: Text of President's speech
But after he finished speaking, Mr. Boehner, in a five-minute address, criticized Mr. Obama for a "massive spending binge," including the 2010 health-care overhaul. He recalled telling the President earlier this year that Americans will not accept a debt limit increase without significant spending cuts.
Mr. Boehner said, "I've always believed the bigger the government, the smaller the people. And right now, we've got a government so big and so expensive it's sapping the drive out of our people and keeping our economy from running at full capacity. The solution to this crisis is not complicated."
With no compromise in sight, the two sides head for a showdown later this week over rival plans aimed at reducing future budget deficits, estimated to total about $7 trillion over the next decade, while raising the nation's $14.3 trillion debt limit.
If the debt limit is not raised by Aug. 2, the government will exhaust its borrowing authority, which could ignite a global financial panic and send the U.S. economy reeling.
After another weekend of stalemate, lawmakers feared markets would stumble yesterday. U.S. stocks fell slightly, and analysts cited concern about the debt limit.
But those losses provoked no rush to find common ground on Capitol Hill; instead, lawmakers spent yesterday staking out partisan positions.
"There is absolutely no economic justification for insisting on a debt-limit increase that brings us through the next election. It's not the beginning of a fiscal year. It's not the beginning of a calendar year," Senate Republican leader Mitch McConnell of Kentucky said. "Based on his own words, it's hard to conclude that this request has to do with anything, in fact, other than the President's re-election."
White House officials say that passing only a short-term debt-ceiling increase would fail to lift the cloud of uncertainty from the controversy that they say contributes to the economic slowdown.
The White House, which backed the Senate Democratic plan, and Senate Majority Leader Harry Reid of Nevada were equally disdainful of the GOP position.
White House press secretary Jay Carney said the GOP was threatening the country with a "my way or the highway" approach, while Mr. Reid insisted, "The Republicans' short-term plan is a nonstarter."
Last night's speeches were a remarkable turn in a six-month-old era of divided government as first the President, then his principal Republican rivals appealed to the nation in a politically defining struggle.
Senate Democrats and House Republicans are pushing rival plans to reduce future budget deficits and avert a potential government default next week. Neither plan raises taxes or cuts major benefit programs such as Medicare, Medicaid, or Social Security.
Democratic plan
The plan by Senate Democrats would cut spending by $2.7 trillion over the next decade while increasing the government’s ability to borrow by $2.4 trillion.
Extends borrowing authority through 2012.
Cuts $1.2 trillion from discretionary programs. These are the day-to-day operating budgets, grants, and programs of government agencies, such as the Interior, Education, Justice, and Defense departments, and the Environmental Protection Agency.
Claims savings of $1 trillion from winding down the wars in Iraq and Afghanistan.
Saves $400 billion from lower interest payments.
Cuts $100 billion from mandatory programs, including agriculture and Fannie Mae and Freddie Mac. Includes savings from reducing waste, fraud, and abuse.
Creates a bipartisan legislative committee to recommend future cuts, with a guarantee that if the panel can agree on a plan, it will receive a vote in Congress.
Republican plan
The plan by House Republicans would reduce spending by $1.2 trillion over 10 years, while increasing the government’s ability to borrow by about $1 trillion.
Extends borrowing authority until about February.
Takes all cuts from the day-to-day operating budgets of government agencies, known as discretionary programs.
Imposes caps on future spending.
Requires the House and Senate to vote on — but not necessarily pass — a balanced budget constitutional amendment by the end of 2011.
Creates a bipartisan legislative committee to recommend $1.8 trillion in cuts to programs such as Medicare, Medicaid, and Social Security, in exchange for increasing the government’s ability to borrow an additional $1.6 trillion.
Mr. Obama quoted Ronald Reagan -- a hero to many conservatives -- who also spoke of a balanced plan and emphasized a need for compromise. He stopped well short of threatening a veto of the GOP-drafted legislation that he criticized.
Mr. Boehner's remarks seemed aimed at the general public and also at conservatives -- Tea Party advocates too -- who put the Republicans in power in the House last fall.
There were concessions from both sides embedded in yesterday's competing legislation, but they were largely obscured by the partisan rhetoric of the day.
With their revised plan, House Republicans backed off an earlier insistence on $6 trillion in spending cuts to raise the debt limit.
And while the President didn't say so, his embrace of legislation unveiled by Senate Majority Leader Harry Reid effectively jettisoned his call for more government revenues as part of any deficit reduction plan.
Not all Republicans were happy with their leadership's decision to scale back legislation that had cleared the House last week, only to die in the Senate.
Among House conservatives who have provided the political muscle for the Republican drive to cut spending, the revised legislation was a disappointment. "I cannot support the plan," said Rep. Jim Jordan of Ohio, one of the leading advocates of legislation that cleared the House last week and died in the Senate.
But two rank-and-file Republicans said their constituents were voicing concerns other than the rising federal debt.
Rep. Tom Rooney (R., Fla.), said his office is getting calls from constituents saying, "If I don't get my Social Security check, it's your fault."
Rep. Tom Reed, a New York freshman, said many of his constituents are telling him to stand firm in his drive to cut spending.
"But I will admit there's some anxiety in the district" about Social Security and other programs," Mr. Reed added.
The Associated Press contributed to this report.