Obama won't compromise over debt ceiling

STEVEN R HURST
Last updated 07:56 15/01/2013

US President Barack Obama says Congress must raise the debt ceiling to honor its debts. Rough Cut (no reporter narration).

Obama
REUTERS
BARACK OBAMA: "We are not a deadbeat nation."

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President Barack Obama has demanded Congress quickly raise the federal debt limit and warned that he will not allow the Republican opposition to "collect a ransom for crashing the US economy", setting out again a tough negotiating position on an issue that threatens to shut down the American government.

The president also said he will soon ask Congress to enact new gun legislation after the shootings a month ago that left 20 elementary students dead in Newtown, Connecticut. Facing stiff opposition from the National Rifle Association, he conceded lawmakers may not approve everything he wants. The NRA is a powerful lobbying organisation that supports gun manufacturers and owners and insists on a strict reading of the 2nd Amendment to the US Constitution that says Americans have a right to own guns.

On the debt ceiling, Obama said Republicans who want to dramatically cut spending in return for raising US borrowing limits "will not collect a ransom in exchange for not crashing the economy".

"The full faith and credit of the United States of America is not a bargaining chip. And they better decide quickly because time is running short," Obama declared, insisting "we are not a deadbeat nation".

He further said he was not willing to continue facing prolonged and bitter debates on the debt, a current reality that he says is hurting the US recovery from the Great Recession.

"I don't think anybody would consider my position to be unreasonable here."

Until the partisan fight over the debt ceiling broke out in 2011, the limit on borrowing had been increased by Congress as a matter of course.

But with a surge in Tea Party Republicans elected to the House of Representatives in 2010, the opposition party has sought to use the power over the debt to enforce its desires for smaller government and spending cuts.

Obama said he was willing to consider future deficit cuts, but only if they are done independently from a vote to raise the US$16.4 trillion (NZ$19.53 trillion) debt limit.

In a blunt rebuttal to Republicans who say they will not agree to any more tax increases, the president said taxes and spending both must be on the table.

He said he is "open to making modest adjustments to programmes like Medicare to protect them for future generations", and wants to close tax loopholes at the same time.

Obama spoke less than a week before his inauguration for a second term, and several days after he signed legislation that narrowly averted a "fiscal cliff" of automatic spending cuts and across-the-board tax increases.

Combined with other bills he signed earlier in the term, he said he and Congress have reduced deficits by about US$2.5 trillion over a decade, somewhat less than the US$4 trillion he said is necessary to get them down to a manageable size.

"I'm happy to have a conversation about how we reduce our deficits in a sensible way," he said, but added repeatedly he wasn't willing to let congressional Republicans use the debt limit as leverage in negotiations over spending cuts.

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Failure to raise the debt limit would put the United States into a first-ever default, a step that Obama said could "blow up the economy".

Congressional Democrats have recently urged the president to lift the debt limit unilaterally. He said - as he has before - that he won't do it, that Congress had voted for the spending that resulted in federal borrowing, and should now agree to pay the bill.

The fight over putting stiffer restrictions on guns promises to be just as bitter.

Among gun violence proposals under consideration at the White House are a ban on assault-style weapons and high capacity ammunition magazines. Obama said he would unveil his proposals next week. He was meeting after his news conference with Vice President Joe Biden, his point man in producing gun control measures to present to Congress.

Obama made his remarks as a new Congress was settling in for its own new term, Republicans in control of the House and Democrats in the Senate.

Lawmakers face three distinct deadlines before April 1. The debt limit must be raised to prevent a default, a series of across-the-board spending cuts is to kick in on March 1, and funding for most government programs will run out on March 27.

Obama virtually dared Republicans to let the government shut down rather than renew funding beyond March 27. "It will hurt the economy," he said emphatically.

- AP

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