‘The American people may have voted for divided government, but they didn’t vote for a dysfunctional government’
PRESIDENT Barack Obama has described the fight over raising the limit on government borrowing and avoiding default on US debt as a “partisan three-ring circus” and blamed the crisis on the refusal of many Republican politicians to compromise.
In a hastily arranged nationally televised speech last night, he said the US was dangerously close to default, and warned of a “reckless and irresponsible” outcome without a compromise solution by the August 2 deadline.
He urged Americans to make their voices heard and let their representatives know they support “a balanced approach to reducing the deficit”.
Speaker John Boehner, who leads the Republican-dominated House of Representatives, offered a nationally televised rebuttal minutes after Obama’s speech, accusing the president of seeking “a blank cheque today” and declaring: “This is just not going to happen.”
Obama and Boehner spoke as the political stalemate over raising the debt limit deepened despite the introduction of new plans by both Boehner’s House Republicans and the Democratic-controlled Senate under the leadership of Harry Reid.
Decrying a “partisan three-ring circus” in the nation’s capital, Obama assailed the newly minted Republican plan to raise the nation’s debt limit as an invitation to another crisis in six months’ time. He said congressional leaders must produce a compromise that can reach his desk before the deadline.
Without signed legislation by close of business on August 2, the Treasury will be unable to pay all its bills, possibly triggering an unprecedented default which officials warn could badly harm a national economy still struggling to recover from the worst recession in decades.
Despite warnings to the contrary, US financial markets have appeared to take the political manoeuvring in their stride – so far. Wall Street posted losses on Monday but with no indication of panic among investors.
Republicans insist on deep cuts in spending in return for their votes to raise the borrowing limit. The Republicans, under the powerful sway of the small-government, low-tax tea party movement, have consistently refused Obama’s request for a balanced approach to deficit reduction that includes both spending cuts and tax increases.
“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,” the president said.
The new measure Boehner and the Republican leadership drafted in the House, in addition to spending cuts and an increase in the debt limit to tide the Treasury over until sometime next year, called for a second increase in borrowing authority sometime next year which would hinge on approval of additional spending cuts sometime during the election year.
Obama said he opposed such a two-stage move because it was not likely to prevent a downgrading of America’s triple-A credit standing as threatened by big credit rating organisations. He wants the current $14.3 trillion debt ceiling raised by at least $2.4 trillion in one vote.
On Monday, the White House backed the new Senate Democratic plan even though it omitted Obama’s requirement of increased tax revenues. It would raise the debt limit by $2.4 trillion to carry the country into 2013, beyond the next election. It calls for $2.7 trillion in federal spending cuts, but assumes $1 trillion of that would derive from the end of the wars in Iraq and Afghanistan.
Echoing the disgust he voiced on Friday when Boehner walked away from talks, the president said: “The American people may have voted for divided government, but they didn’t vote for a dysfunctional government.”
Obama quoted Ronald Reagan – a hero to many conservatives – who also spoke of a balanced plan and stressed a need for compromise.
Obama had only just walked away from the podium in the White House East Room when Boehner appeared on national television screens from the Capitol.
“The president has often said we need a ‘balanced’ approach, which in Washington means we spend more, you pay more,” Boehner said.
“The sad truth is that the president wanted a blank cheque six months ago, and he wants a blank cheque today. That is just not going to happen.”
Directly challenging the president, Boehner said there “is no stalemate in Congress”.
He said the Republicans’ latest plan would clear the House, could clear the Senate and then would be sent to Mr Obama for his signature.
The back-to-back televised speeches did little to suggest that a compromise was in the offing, and the next steps appeared to be votes in the House and Senate on the rival plans by midweek.
Senate Republican leader Mitch McConnell urged the president to shift his position rather than “veto the country into default”.
And Reid slammed tea party-backed Republicans who make up a significant portion of the House Republican rank and file. He warned against allowing “these extremists” to dictate the country’s course.
The Reid legislation in the Senate drew praise not only from Obama but also from House Democratic leader Nancy Pelosi – and criticism from Republicans.
There were concessions from both sides embedded in the 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.
Obama did not repeat his vow to veto the revised House measure, as he had with an earlier version calling for deep cuts, a cap on spending and passage by both houses of a constitutional amendment requiring the federal government to operate only under a balanced budget.
White House communications director Dan Pfeiffer called the new House proposal “not a serious attempt to avert default because it has no chance of passing the Senate”.
Not all Republicans were happy with their leadership’s decision to scale back legislation which 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 Jim Jordan, one of the leading advocates of the so-called “Cut, Cap and Balance” plan which cleared the House last week and died in the Senate.
But others among rank-and-file Republicans said their constituents were voicing concerns other than the rising federal debt – worries about Social Security pension payments to retirees and Medicare insurance coverage for the elderly, both Republican targets for deep spending cuts.
