WASHINGTON (FinalCall.com) – President Obama scolded lawmakers in no uncertain terms June 29 telling reporters that he expects Congress to deliver a compromise deal to raise the nation’s debt ceiling.
“At a certain point,” Mr. Obama said, “they need to do their job.” Lawmakers must raise the nation’s $14.3 trillion legal borrowing limit soon. The Treasury Department says that on Aug. 2 it will run out of money to pay the nation’s bills in full and on time.
“This is urgent, and it needs to get settled,” the president said, suggesting that lawmakers cancel their July 4 vacations. “You stay here. Let’s get it done.” Republicans have demanded that any deal to raise the debt ceiling include deep spending cuts, but they have been adamantly opposed to any proposals by Democrats that would increase revenue such as eliminating tax breaks for enormously profitable oil companies.
Mr. Obama said he wants to close loopholes in the tax code and eliminate subsidies that favor the wealthy or large corporations. “Everyone else has moved off their maximalist positions,” he said at a news conference. Republicans “need to do the same.”
The Standard and Poor’s rating agency recently said it would immediately cut the United States’ top-notch credit rating if it missed a $30 billion debt payment on August 4. “I want everybody to understand that this is a jobs issue, this is not an abstraction. If the United States government for the first time cannot pay its bills, if it defaults, then the consequences for the U.S. economy will be significant and unpredictable and that is not a good thing,” Mr. Obama said.
“If everybody else is willing to take on their sacred cows and do tough things to achieve the goal of real deficit reduction, then I think it would be hard for the Republicans to stand there and say the tax break for corporate jets is sufficiently important that we’re not willing to come to the table and get a deal done.”
“What I can say is, he was absolutely right in what he said yesterday, and he was absolutely right in the tone he used to say it,” Dr. Wilmer Leon, assistant professor of political science at Howard University told The Final Call. “In fact I would say, he still wasn’t strong enough.”
Negotiations hit an impasse when top Republicans pulled out of deficit reduction talks with Vice President Joe Biden, saying that the White House’s insistence on tax increases amounted to a deal-killer. Republican members of Congress say they won’t vote to raise the debt ceiling without major deficit reductions achieved by cuts to social programs and the nation’s “safety net” which protects the elderly and the indigent.
Should the U.S. fail to raise the cap, the Obama administration said the country would default on its debt, with catastrophic implications for the nation’s bond rating and its status as an economic superpower.
Pres. Obama painted a stark image of the winners and losers under the debt deal favored by Republicans. Oil companies that are already making money “hand over fist,” he said, would continue to receive taxpayer subsidies while “a bunch of kids out there are not getting college scholarships.” Medical research would be undermined and food inspection would be weakened if the Republicans pursue their “maximalist position,” the president said.
“If you’re a wealthy CEO or hedge fund manager in America right now your taxes are lower than they have ever been,” Mr. Obama said. “They’re lower than they’ve been since the 1950s, and you can afford it. You’ll still be able to ride on your corporate jet. You just have to pay a little more. It would be nice if we could keep every tax break there is. But we’ve got to make tough choices here to reduce our deficit,” he said.
“But history tells us that he does this talking and then he concedes,” Dr. Leon continued. “You know, he finds a way to roll over.”
Meanwhile, the president personalized the issue, noting that his two young daughters, Malia and Sasha, manage to get their homework done ahead of time. If they can do it, so can Congress, he said.
The Senate’s top Republican invited Mr. Obama to a GOP lunch at the Capitol to discuss the ongoing dispute over the debt and related issues, but the White House rebuffed the invitation. Sen. Mitch McConnell (R-Ky.), the minority leader, urged Mr. Obama to meet with Republicans to explain his position. “That way he can hear directly from Republicans why what he’s proposing won’t pass,” Mr. McConnell said. “And we can start talking about what’s actually possible.”
At a televised news briefing, White House Press Secretary Jay Carney said Republicans just wanted to restate their hard-line position. “That’s not a conversation worth having,” Mr. Carney said, adding the administration is open to compromise talks.
Democrats are seeking what they call a balanced approach, asking for $760 billion in tax revenues, largely by cutting tax breaks on corporations and wealthy individuals, which Republicans oppose. Both sides back spending cuts, but they have yet to reach final agreement on the size and programs to be trimmed.
There is also the question of changes in entitlement programs such as Medicare and Medicaid, which the GOP wants to overhaul. Democrats have argued that the debt issues shouldn’t be resolved at the sole expense of the elderly and the poor.
There will probably be a short-term compromise to avert the August default deadline, Dr. Leon predicted, before the major issues are resolved. Mr. Obama, he said, may have an obscure constitutional maneuver which he can invoke to forestall the default. “One of the things that I have to look at, is Section 4 of the 14th Amendment, which talks about validity of the public debt. Some are telling me that the president, through executive order can do this himself, and that Section 4 of the 14th Amendment gives him the ability to do it.”
The first sentence of Section 4 of the 14th Amendment, which was adopted at the end of the Civil War, reads: “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”
“So basically, what people are saying is, that the president is being incredibly cagey and strategic, in not playing this trump card, and that he’s trying to extract as much pain as he can from the Republicans, and then at the last moment, he could, via executive order, Section 4 of the 14th Amendment, just say, ‘I’m raising the debt ceiling and this is what allows me to do so,’” said Dr. Leon.