“The consequences of failing to increase the debt ceiling are real, but so too are the consequences of allowing our spending problem to go unresolved,” Boehner, R-Ohio, wrote in a statement this afternoon. “Without meaningful action, the debt will continue to act as an anchor on our economy, costing American jobs and endangering our children’s future.”
While Boehner has long maintained that any increase to the debt limit must be matched or exceeded by spending cuts and reforms, the president has insisted that “the financial well being of the American people is not leverage to use.” Earlier today, the president warned that if the GOP drags out another fight over the looming need to increase the debt limit, all sorts of bills won’t be paid on-time, leading to a “self-inflicted wound on the economy.”
“We might not be able to pay our troops, or honor our contracts with small business owners,” Obama said during a news conference in the East Room of the White House. “Investors around the world will ask if the United States of America is, in fact, a safe bet. Markets could go haywire. Interest rates would spike for anybody who borrows money.”
Nevertheless, House Republican leaders say they will press forward on legislation to control spending, meet the nation’s obligations and keep the government open for business.
“The American people deserve better from Washington. We cannot deliver meaningful change and necessary reforms if we refuse to address out-of-control spending,” House Majority Leader Eric Cantor, R-Va., wrote in a statement. “Under President Obama, we have seen record-setting deficit spending and trillions added to our nation’s debt. This is leadership failure.”
But the president clearly has his own backers in Congress. House Minority Leader Nancy Pelosi blamed Republicans for the first downgrade of the country’s credit rating in 2011.
“Republicans must not threaten the full faith and credit of the United States. America always pays its bills, and Republicans should not use veterans, seniors, small businesses, public safety, or the stability of our housing and stock markets as leverage,” Pelosi, D-Calif., said. “Republicans who are threatening to force America to default on its debt for the first time in our history will do great damage to our economy, to our middle class, and to our world standing.”
Democrats also pledged to play “a positive role” in discussions to reach an amicable resolution in the weeks ahead.
“With the start of the new Congress, we have the opportunity for a fresh start,” Pelosi said. “We must seek common ground and work together, Democrats and Republicans, to create jobs, strengthen the middle class, and grow the economy, as we reduce our deficit in a balanced way.”
“While the American people expect Democrats and Republicans to meet in good faith at the negotiating table to achieve a big and balanced solution to the challenge of deficit reduction, they will not tolerate any party playing partisan games with a possible default and further downgrade of our credit,” House Minority Whip Steny Hoyer, D-Md., added. “America must live up to its obligations while seeking a more disciplined fiscal future.”
The Treasury Department estimates that the statutory debt limit will need to be increased by the end of February. Congress last increased the limit in August 2011 in the Budget Control Act.
Since 1917, Congress has traditionally placed a limit on the total amount of debt that the Treasury Department may issue to the public and federal agencies. The current statutory debt limit is $16.394 trillion.
Some of the more conservative members of Boehner’s conference implied that the debt limit debate is over-hyped and called on the White House to prioritize payments rather than default on its bills.
“President Obama seems to be the only person in Washington who threatens default on America’s debt obligations,” Rep. Steve Scalise, the chairman of the Republican Study Committee, wrote in a statement. “The President has an obligation to preserve the credit rating of the United States, and hitting the debt ceiling does not immediately trigger a default unless his administration fails to do its job and prioritize our debt payments.”
The federal treasury takes in an estimated $2.5 trillion per year [in revenue], more than enough, Scalise said, to pay about $220 billion in interest payments to stave off default.
“The president is wrong to think of a debt limit increase as a rubber stamp. Those days are over,” Rep. Tom Graves, R-Ga., said. “The debt limit is one of the last stop signs left in Washington, and Congress should use it to force the president to enact tax and spending reform so that future generations do not bear the burden of this government’s irresponsible behavior.”