President Barack Obama warned Congress against using the debt ceiling as leverage in the spending debate, saying “markets could go haywire” and government payments, from Social Security checks to military salaries, would be held up if the limit isn’t raised.
Republican lawmakers “will not collect a ransom” if they refused to raise federal borrowing authority without delay, Obama said at a White House news conference. “These are bills that have already been racked up.”
Obama is seeking to head off a fight with Congress in the coming weeks over raising the $16.4 trillion U.S. debt ceiling as Republican lawmakers consider a government shutdown or default as a means to extract spending cuts.
Editor's Note: Prophetic Economist Warns: “It’s Curtains for America.” See Evidence.
The president also said he’s ready to move ahead with additional steps to curb the deficit, including raising more tax revenue by closing loopholes in the tax code.
“We can’t finish the job of deficit reduction through spending cuts alone,” Obama said.
The president spoke two days after the U.S. Treasury Department rejected the idea of minting a platinum coin to avoid the debt limit.
Obama and his aides have taken the public position that the White House won’t negotiate with lawmakers over any deal to raise the debt ceiling because the U.S. has no choice other than to pay debts already incurred. That leaves two options — raising the ceiling, or default.
Borrowing Authority
The Treasury reached its statutory borrowing limit on Dec. 31 and is using “extraordinary” measures to pay for the government. It will lack sufficient funds to pay all its bills as early as Feb. 15, according to the Washington-based Bipartisan Policy Center.
The debt ceiling wasn’t included in the end-of-year deal to avert more than $600 billion of spending cuts and tax increases that were set to start taking effect this month.
The prospect of default is threatening to slow the biggest wave of municipal refunding since 1993.
As the U.S. reached its statutory borrowing limit last month, the Treasury Department stopped issuing special securities that usually make it easier and cheaper for localities to refinance higher-cost debt.
With municipal yields falling to 47-year lows, cities and towns bought $138 billion of these State and Local Government Series securities last year, the most since 2005, data from Municipal Market Advisors show.
Editor's Note: Prophetic Economist Warns: “It’s Curtains for America.” See Evidence.
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