Obama pressures Republicans on federal debt ceiling
President Obama is sharply intensifying pressure on congressional Republicans in negotiations over the federal debt, depicting GOP leaders as supporting tax breaks for jet-setting corporate executives at the expense of college scholarships or medical research.
Obama chastised Republican leaders in an hourlong televised news conference Wednesday, moving the debt talks out of the realm of closed-door Washington meetings and into full public view, and setting off a high-stakes effort to mobilize public opinion.
Obama and Republicans have been locked for more than a month in a confrontation over raising the nation’s borrowing limit. Republicans have insisted they will not approve the increase unless Obama and congressional Democrats agree to reduce the debt in the long term — though the GOP spending plan would also require raising the debt ceiling. Last week, top Republicans pulled out of discussions with Vice President Joe Biden, objecting to a White House demand that any deal include additional revenue as well as spending cuts.
The news conference represented a rare instance of Obama using the presidential megaphone to defend his position. In the past, the president has been prone to delivering lengthy answers in a professorial tone, relying on abstract ideas. By contrast, Obama on Wednesday laid out his arguments in simple, everyday terms, echoing an ex-president that he has been studying: Ronald Reagan.
“These are bills that Congress ran up,” Obama said, in explaining why the U.S. must not default on its debt obligations. “They took the vacation. They bought the car. Now they’re saying, ‘Maybe we don’t have to pay.’”
Obama also chided lawmakers for taking frequent recesses instead of staying in Washington to finish work on the debt question. He added that his two young daughters exhibited more diligence in doing their homework than Congress had shown.
“They don’t wait until the night before,” he said. “They’re not pulling all-nighters. Congress can do the same thing.”
Reacting to the criticism, senators considered abandoning a weeklong July 4 recess, and House leaders said they would stay in session until negotiations were finished.
Sen. Kent Conrad (D-N.D.) said the chances of the Senate being in session next week were “pretty good.”
But Republican leaders offered scant hope of a shift on the issue of tax revenues. “The president is sorely mistaken if he believes a bill to raise the debt ceiling and raise taxes would pass the House,” said House Speaker John A. Boehner (R-Ohio).
Some of the GOP rank and file, however, indicated they would consider new revenue sources, posing a potential challenge to party unity. “I’m not too sympathetic to all these jets myself, so I’d be willing to consider that,” said Sen. Jeff Sessions of Alabama, the top Republican on the Budget Committee.
Others said it would depend on which loophole was being eliminated. “I’m willing to take a look at the special deals,” said Sen. Ron Johnson (R-Wis.). “I would love to do away with special tax breaks, but not legitimate business deductions.”
Obama cited the high-profile tax break offered to owners of corporate jets several times in the news conference, even though it would bring in only an estimated $3 billion over 10 years. Other Democratic proposals would tighten oil and gas tax credits, netting $41 billion over 10 years, and eliminate credits for hedge fund managers, netting $21 billion.
The largest Democratic tax proposal would limit the deductions that may be claimed by those earning more than $500,000 a year. The White House said earlier this year that in all, it wants $760 billion in new revenue over 10 years.
With the Fourth of July weekend coming up, the Obama administration will send top officials to appear on television to echo the president’s message and build a consensus behind what he calls a “balanced” approach to deficit reduction. Gene Sperling, the president’s top economic advisor, will be one of those leading the push.
The government reached the limit of its borrowing ability in May, and federal officials warn that maneuvers to continue paying the nation’s bills will be exhausted by Aug. 2, risking a default on federal obligations.
Underscoring the concerns, the International Monetary Fund warned in a report Wednesday that failure by Congress to raise the borrowing limit could result in “a severe shock to the economy and world financial markets.”
Nonetheless, many Republicans regard the administration’s warnings as a scare tactic and refuse to raise the debt ceiling without major reductions in the nation’s deficit, chiefly through spending cuts. They oppose new revenue from any source, even unpopular credits and loopholes.
“The corporate plane tax hike that the president now wants would bring in about $3 billion in new taxes,” said Don Stewart, a spokesman for Senate Republican leader Mitch McConnell of Kentucky. “The president wants hundreds of billions in new taxes. Where would they get the rest?”
Democrats have countered that its significance is symbolic, showing that Republicans refuse to consider even such obvious measures.
The president 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, at the expense of “a bunch of kids out there who are not getting college scholarships.”
Medical research would be undermined and food inspection would be weakened if the Republicans pursued their “maximalist position,” the president said.
“If you’re a wealthy CEO or a hedge fund manager in America right now, your taxes are lower than they have ever been,” he said. “You’ll still be able to ride on your corporate jet; you’re just going to have to pay a little more.”
He added: “It would be nice if we could keep every tax break there is. But we’ve got to make some tough choices here if we want to reduce our deficit.”
Lisa Mascaro in the Washington bureau contributed to this report.
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