Obama warns of debt crisis

President urges compromise

Monday, July 25, 2011 9:18 PM
Last updated Tuesday, July 26, 2011 2:17 AM
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WASHINGTON - Decrying a "partisan three-ring circus" in the nation's capital, President Obama criticized a newly minted Republican plan to avert an unprecedented government default tonight and said congressional leaders must produce a compromise that can reach his desk before the Aug. 2 deadline.

Jim Watson/Associated Press
“It is a dangerous game we’ve never played before, and we can’t afford to play it now,” President Obama said Monday night of the politics surrounding the debt crisis. “Not when the jobs and livelihoods of so many families are at stake.”

"The American people may have voted for divided government, but they didn't vote for a dysfunctional government," the president said in a hastily arranged prime-time speech. He appealed to the public to contact lawmakers and demand "a balanced approach" to reducing federal deficits.

Obama stepped to the microphones a few hours after first Republicans, then Democrats drafted rival fallback legislation Monday to avert a potentially devastating government default in little more than a week.

Obama said the approach unveiled earlier in the day by House Speaker John Boehner would raise the nation's debt limit only long enough to push off the threat of default for six months. "In other words, it doesn't solve the problem," he said.

The president had scarcely completed his remarks when Boehner made an extraordinary rebuttal carried live on the nation's networks.

"The president has often said we need a 'balanced' approach, which in Washington means we spend more, you pay more," the Ohio Republican said, speaking from a room just off the House floor.

"The sad truth is that the president wanted a blank check six months ago, and he wants a blank check today. That is just not going to happen."

Directly challenging the president, Boehner said there "is no stalemate in Congress."

He said the Republicans' newest legislation would clear the House, could clear the Senate and then would be sent to 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 mid-week.

Despite warnings to the contrary, U.S. financial markets have appeared to take the political maneuvering in stride - so far. Wall Street posted losses Monday but with no indication of panic among investors.

Without signed legislation by day's end on Aug. 2, the Treasury will be unable to pay all its bills, possibly triggering an unprecedented default that officials warn could badly harm a national economy struggling to recover from the worst recession in decades.

Obama wants legislation that will raise the nation's debt limit by at least $2.4 trillion in one vote, enough to avoid a recurrence of the acrimonious current struggle until after the 2012 elections.

Republicans want a two-step process that would require a second vote in the midst of a campaign for control of the White House and both houses of Congress.

There were concessions from both sides embedded in the competing legislation, but they were largely obscured by the partisan rhetoric of the day.

 Senate Republican leader Mitch McConnell of Kentucky urged Obama to shift his position rather than "veto the country into default."

And Reid jabbed at tea party-backed Republicans who make up a significant portion of the House GOP rank and file. The Nevada Democrat warned against allowing "these extremists" to dictate the country's course."

The measure Boehner and the GOP leadership drafted in the House called for spending cuts and an increase in the debt limit to tide the Treasury over until sometime next year. A second increase in borrowing authority would hinge on approval of additional spending cuts sometime during the election year.

Across the Capitol, Reid wrote legislation that drew the president's backing, praise from House Democratic leader Nancy Pelosi - and criticism from Republicans.

By design or not, the two sides' harsh remarks obscured concessions that narrowed the differences among the nation's political leaders as they groped for a way to resolve the economic crisis.

With their revised plan, House Republicans backed off an earlier insistence on $6 trillion in spending cuts to raise the debt limit.

And Obama jettisoned his longstanding call for increased government revenues as part of any deficit reduction plan.
Pending the president's televised speech, the White House also declined repeatedly to say whether Obama would veto the revised House measure.

White House communications director Dan Pfeiffer called the 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 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, he added.

As Boehner readied his legislation, Senate Democratic leaders called a news conference to announce their own next steps.

The Democrats' measure would cut $2.7 trillion in federal spending and raise the debt limit by $2.4 trillion in one step - enough borrowing authority to meet Obama's bottom-line demand.

The cuts include $1.2 trillion from across a range of hundreds of government programs and $1 trillion in savings assumed to derive from the end of the wars in Afghanistan and Iraq.

Boehner ridiculed the $1 trillion in war savings as gimmicky, but in fact, they were contained in the budget the House passed earlier in the year.

The legislation also assumes creation of a special joint congressional committee to recommend additional savings with a guaranteed vote by Congress by the end of 2011.
Yet in the maneuvering it appeared another of the president's long-held conditions appeared to be in danger of rejection.

Neither Boehner's measure nor the one Reid was drafting included additional revenue, according to officials in both parties.

In addition to a two-step approach to raising the debt limit, the House measure would require lawmakers in both houses to vote later this year on a constitutional amendment requiring a balanced federal budget.

An earlier bill, passed in the House last week but then scuttled in the Senate, would have required Congress to approve an amendment and send it to the states for ratification.

That same bill would have made $6 trillion in spending cuts in exchange for raising the debt limit.
Obama promised to veto that bill even before the House voted on it.

Each side offered accounts of secret maneuvering designed to put the other side in a poor light.
Democratic officials said Obama called Boehner on Saturday night, one day after the collapse of compromise talks, and offered to reduce his demand for new tax revenue by $400 billion.

In return, Obama said that he wanted Republicans to abandon their demand to cancel parts of the year-old health care law if future deficit cuts did not materialize.

This official said Boehner rejected the proposal Sunday.

Republicans disputed that account - and offered one of their own.

In their version of events, Reid agreed on Sunday night to a two-step approach to raising the debt limit that Obama has rejected.

Democrats denied it.

None of the officials involved would agree to be quoted by name.

Monday's debt developments

Congress has until Aug. 2 to raise the federal borrowing limit or the government will run out of money and possibly default on its debt. House Republicans say they won't raise the debt limit without equal spending cuts. President Barack Obama and Democrats insist that higher revenues must be included.

Monday's developments: House Republicans and Senate Democrats offered competing legislation that narrowed their differences over how to avert a government default. House Republicans backed off an earlier insistence on $6 trillion in spending cuts to raise the debt limit while President Barack Obama dropped his longstanding call for increased government revenues as part of any deficit reduction plan.

What's next: House Republican leaders were expected to share details of their proposal to the rank and file and begin planning a vote, perhaps as early as Wednesday. In the Senate, Democratic leaders were expected to offer details of their plan.

- Associated Press

Comments (64) Add comment
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blakkone
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blakkone 07/27/11 - 08:39 am
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MYFATHER15...please

MYFATHER15...please elaborate...since u know me and everything about me, then what other categories do I fall into??

KSL
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KSL 07/27/11 - 12:12 pm
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blakkone, at least the one

blakkone, at least the one who invests in municipal bonds and gets income tax free is someone who is providing money to be used for the public good. What benefit is the one who is not working and not paying taxes providing society? Most likely he is on the receiving end of public largess.

KSL
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KSL 07/27/11 - 12:11 pm
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"Just the sound of his voice

"Just the sound of his voice produces nausea." I can't agree with you more. I can not stand that snakey, hissy thing he does with words ending with "s." I refuse to listen to anything he said. I've come to hate looking at him.

blakkone
72
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blakkone 07/27/11 - 12:38 pm
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KSL...very true statement on

KSL...very true statement on ur 12:12 post. but what "good" is the gov't doing with our money now that they receive from us? I dont care about someone not working and not paying taxes. not affecting me or my family. Commenters have a strong disdain for nonworkers, labeling them as "lazy" when people are out of work for a multitude of reasons. I was out of work for a while at one point in my life but I am far from "lazy".

Also, your next post about hating to look at him has gone from not agreeing with his political stance to outright hate for this man. I have no problem with poeple who disagree with his administration and the handling of responsibilities. But it has grown to an absolute hate for the President and that is a very dangerous emotion to have.

KSL
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KSL 07/27/11 - 12:46 pm
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People out of work are not

People out of work are not lazy. But there are multitudes of people who refuse to work because they can get by without having to. The government allows for it.

I'm sorry. I do hate him. It's because I believe he is intentionally trying to destroy this country. His polices are not just misguided, they are intentional.

blakkone
72
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blakkone 07/27/11 - 01:52 pm
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Yes, there are some who do

Yes, there are some who do not work and abuse the system. And yes, the government allows for this. But in the end, they will receive what's due them. Welfare and abuse has been around way before President Obama took office and will continues long after he is gone.

As for the second comment, do you seriously believe he is intentionally trying to destroy the nation?? Really?? That's a bit extreme. Almost conspiracy theory thinking. His policies may not have produced the outcome we all desired but...intentional??? I don't know about that...

KSL
126832
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KSL 07/27/11 - 02:26 pm
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Yes, I do believe it,

Yes, I do believe it, blakkone. Doesn't he want another stimulus package when the first one clearly didn't work? Lots of us knew before hand that it wasn't going to work.

KSL
126832
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KSL 07/27/11 - 02:33 pm
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And exactly what have Obama

And exactly what have Obama and the Democrats accomplished in 2.5 years? Obama keeping his campaign promises to end the wars? How about job creation? Keeping unemployment under 8%?

blakkone
72
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blakkone 07/27/11 - 03:02 pm
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I hear ya, KSL.

I hear ya, KSL.

blakkone
72
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blakkone 07/27/11 - 03:05 pm
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"Why would any working middle

"Why would any working middle class person vote Republican? I don't get it."

I don't get it either. working class republicans really think their parties care about them and their meager existence. They focus on the top corporations and the elite and wealthy members of society. Do they believe Obama is for the working middle class and that means YOU, the republican-crazy person making just 40k and barely making ends meet?

blakkone
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blakkone 07/28/11 - 09:19 am
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MYFATHER15...I can agree with

MYFATHER15...I can agree with everything you said, except for the nasty category that you would put me. To be clear, I do not follow or care about any politician in this land. I also believe they do not do whats in the best interest of the nation, and that is why we are facing a debt ceiling crisis that could cripple this nation. Obama is trying to get re-elected and the Repub want him out in 2012. Meanwhile the fate of the common people hang in the balance.

So let me discredit some things in your statement: 1) I do not believe Dems are any better. No politician is better than the next. 2) I do not believe "them" whoever "them" is, per your last paragraph. 3) I vote for the lesser of two evils also. I also vote because people have died for the right for me to do so. 4) yes I remember the checks from the Bush era. believe me though, that was not "free" money.

Other than that, I agree with the majority of what you are saying.

See, I'm not so bad, now am I?

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