Obama calls for compromise over debt crisis
President Barack Obama says the Republican approach to the US debt crisis is a “dangerous game” and calls for compromise as the US risks defaulting on its $14.3tr debt.
In a televised address aimed at rallying public support for a package proposed by Democrats, President Obama warned that failure to increase the US borrowing limit would severely hurt the nation.
The US Government runs an annual budget deficit that topped $1.5tr (£920bn) this year, and risks default on its total debt of $14.3tr (£8.7tr) if it doesn’t strike a deal to raise the borrowing limit by 2 August.
Votes to raise the US debt ceiling have usually been a matter of routine in Congress, but this year Republicans have refused to agree without a reduction in spending.
Democrats want to shield Medicare and Medicaid by taxing wealthier Americans to generate more revenue.
Although both parties insist they will not allow the United States to default, they have not produced a plan to lift the debt ceiling.
“For the first time in history, our country’s triple-A credit rating would be downgraded, leaving investors around the world to wonder whether the United States is still a good bet,” President Obama said on Monday night.
Republican lawmakers in the House of Representatives are adamant they will not vote for a deal that includes tax increases, reflecting the determination of Tea Party conservatives elected last year to shrink government. They control the House while Democrats hold sway in the Senate.
Their own plan included $1.2tr (£736tr) in cuts, caps on future spending, and offered a $1tr debt ceiling increase – not enough to last through the 2012 election.
Democrats formally presented their competing plan for $2.7tr in deficit reduction over the next decade with a debt limit increase to carry through the November 2012 election.
Last night President Obama was sharply critical of the Republican approach, saying: “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.”
That approach, he added “doesn’t ask the wealthiest Americans or biggest corporations to contribute anything at all”.
He said: “Most Americans, regardless of political party, don’t understand how we can ask a senior citizen to pay more for her Medicare before we ask corporate jet owners and oil companies to give up tax breaks that other companies don’t get.”