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Obama seems to gain ground in debt fight

With the government just weeks from running out of money to pay its bills, President Obama and prominent Republicans have started to act as if the White House has the upper hand in the current round of the battle over federal spending.

In recent days, Obama rebuffed suggestions that he consider ways to sidestep the need to raise the limit on the government’s debt, reinforcing his demand for a congressional vote. On Monday, he repeated that stand in a hastily announced news conference, criticizing Republicans for threatening to “blow up the economy” and insisting that “no simpler way” exists to deal with the debt ceiling.

Republicans for months have pointed to the moment the nation runs up against the debt ceiling as their point of maximum leverage to force spending cuts, but now seem increasingly divided. Some leaders appear to be looking for a way out of the confrontation, suggesting the party would be wiser to fight Obama over cuts when less is at stake for the economy. Influential GOP strategists are warning that a repeat of the fight they waged in summer 2011 could backfire.

Obama used his bully pulpit in the East Room on Monday to repeat his vow not to negotiate with Republicans on the borrowing limit. The president, who began his first term promising to bridge the party divide, employed unusually vivid language to disparage his GOP adversaries. He called their strategy “absurd” and compared it to pointing “a gun at the head of the American people.”

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“They can act responsibly and pay America’s bills, or they can act irresponsibly and put America through another economic crisis,” Obama told reporters. “But they will not collect a ransom in exchange for not crashing the American economy.”

Obama, who negotiated spending cuts as part of an agreement to raise the debt limit in 2011, but voted against raising it as a senator in 2006, sought to reframe the debate in terms favorable to his current position. “Raising the debt ceiling does not authorize us to spend more. All it does is say that America will pay its bills. And we are not a deadbeat nation,” Obama said.

The president laid out a harrowing scenario if the nation suffered “a self-inflicted wound on the economy” and defaulted on its debt. “Social Security checks and veterans’ benefits will be delayed,” he said. “Food inspectors, air traffic controllers, specialists who track down loose nuclear material wouldn’t get their paychecks. Investors around the world will ask if the United States of America is, in fact, a safe bet. Markets could go haywire.”

Obama got some help from Federal Reserve Chairman Ben S. Bernanke, who compared not raising the debt ceiling to not paying a credit card bill. “It doesn’t create new deficits. It doesn’t create new spending,” he said. “It’s very, very important that Congress take necessary action to raise our debt ceiling to avoid a situation where our government doesn’t pay its bills.”

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Current federal law limits the amount the Treasury Department can borrow to $16.4 trillion. But Congress has appropriated, and Obama has signed into law, spending that far exceeds what the government collects in revenue, requiring additional borrowing. If Congress doesn’t act, the nation would not be able to pay its bills, causing the first widespread default in U.S. history.

Treasury Secretary Timothy F. Geithner notified Congress on Monday that the government would reach that point between “mid-February and early March.”

The debt ceiling deadline isn’t the only fiscal fight coming to a head. A set of deep spending cuts is scheduled to take effect in early March, and a few weeks later the government would shut down if Congress does not authorize continued spending for routine operations. Republican leaders have been considering these pressure points as ways to force spending cuts on the White House.

House Speaker John A. Boehner (R-Ohio) and his GOP leadership team convened behind closed doors over the weekend to draft a strategy to discuss with rank-and-file lawmakers this week.

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Boehner’s task is complicated by a rowdy conservative wing that has diminished his ability to control the House Republican majority. Having stomached tax increases in the year-end “fiscal cliff” deal, many conservative Republicans are primed to win major spending cuts and are willing to take drastic action.

“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,” conservative Rep. Tom Graves (R-Ga.) said in a statement.

Yet some more moderate voices that are influential with the GOP, including the U.S. Chamber of Commerce, have warned against another debt ceiling fight to avoid the potential catastrophic risk of a default.

“We are supportive of the U.S. paying its debts and concurrently reducing operating expenses to put the U.S. economy on stronger financial footing in the long term,” said Scott Talbott, a spokesman for the powerful Financial Services Roundtable, a leading association of bankers and Wall Street firms.

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Republican strategist Karl Rove noted last week in a column in the Wall Street Journal that Republicans in Congress might not like having to raise the debt ceiling without gaining their full wish-list of spending cuts, but “that’s the cost of losing the 2012 election.”

The House speaker tried to balance these competing pressures in his response to the president Monday.

“The American people do not support raising the debt ceiling without reducing government spending at the same time,” Boehner said in a statement. He did not mention his insistence on what has come to be called the Boehner rule: at least a dollar-per-dollar ratio of spending reductions to new debt.

But Boehner also hinted at the limits of the fight. “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,” he said.

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Speaking off the cuff, Obama argued that warmer personal relations would do little to smooth the path for his legislative goals. He’s been golfing with Boehner, he noted. He and his wife, Michelle, take pictures with lawmakers at the congressional picnic. “But it doesn’t prevent them from going onto the floor of the House and blasting me for being a big-spending socialist,” he said.

But the president joked that could change now that his daughters are older and don’t want to spend that much time with their dad.

“So I’ll be probably calling around, looking for somebody to play cards with me or something, because I’m getting kind of lonely in this big house,” he said. “So maybe a whole bunch of members of the House Republican caucus want to come over and socialize more.”

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kathleen.hennessey@latimes.com

lisa.mascaro@latimes.com

christi.parsons@latimes.com


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