President Barack Obama prodded Congress today to reach a sweeping long-term deal within the next two weeks to raise the U.S. government’s borrowing limit rather than “kick the can down the road” with a makeshift, short-term solution. He declared the deal must include tax increases Republicans strongly oppose.Obama said he was summoning leaders of both parties to the White House on Thursday to try to break the congressional impasse and beat an Aug. 2 deadline to avert a first-ever federal default that could shake economic markets worldwide.
He said congressional leaders from the House of Representatives and the Senate, both Republicans and Democrats, were being invited to meet on the issue Thursday at the White House. That would bring the top eight lawmakers together with Obama and top administration financial officials.
The administration says that if the government’s borrowing limit is not increased by Aug. 2, the U.S. will face its first default ever, potentially throwing financial markets into turmoil.
Many congressional Republicans indicate they’re unconvinced that such scenarios would occur, and some administration officials worry that it could take a financial calamity before Congress acts.
Obama said he opposed a stopgap, short-term increase, as suggested by some lawmakers. He did not rule out a limited extension, however, and his spokesman, Jay Carney, later refused to say whether the president would veto such a measure.
Obama renewed his stand that any deal must include not only spending cuts but also new revenue, which means tax increases vehemently ruled out by many Republicans in Congress.
“We need to come together over the next two weeks to reach a deal that reduces the deficit and upholds the full faith and credit of the United States government and the credit of the American people,” Obama said at the White House.
“We’ve made progress, and I believe that greater progress is within sight, but I don’t what to fool anybody: we still have to work through some real differences.”
Despite the president’s optimism, it remained unclear where compromise could be found. Republicans are insisting they will not vote to raise the debt limit without major spending cuts; Democrats are refusing to sign off on cuts of such magnitude without at least some tax increases as well. Republicans say they will not sign off on any tax hikes at all, including those Obama wants targeting the wealthiest Americans or closing loopholes to corporations.
Republican House Speaker John Boehner said any meeting with Obama would be “fruitless” unless the president recognized that no tax increase can pass Congress.
“We’re not dealing just with talking points about corporate jets or other ‘loopholes.’ The legislation the president has asked for, which would increase taxes on small businesses and destroy more American jobs, cannot pass the House, as I have stated repeatedly,” Boehner said.
The men spoke as the Aug. 2 deadline for raising the U.S. borrowing limit came closer. Experts say lawmakers must waste no time in making a deal if they are to have any chance of getting it completed and passed through both chambers of Congress in time.
Despite the president’s optimism, it remained unclear where compromise could be found. Republicans are insisting they will not vote to raise the debt limit without major spending cuts; Democrats are refusing to sign off on cuts of such magnitude without at least some tax increases as well. Republicans say they will not agree to any tax hikes, including those Obama wants that would target the wealthiest Americans or close loopholes to corporations.
Despite calling on others to leave ultimatums at the door, Obama stuck to his – that any deal must include new tax revenue.
All told, lawmakers and the administration are seeking deficit cuts in the range of $2.4 trillion over the coming decade to balance a similar increase in the debt limit – enough to keep the government afloat past the November 2012 election. Currently the debt limit is $14.3 trillion.