Obama Calls GOP Debt Ceiling Tactics ‘Extortion’
President Barack Obama stuck to his guns, and gave a civics and economic lesson, at a press conference Tuesday. He said to allow legislators of any party to insist on a certain policy before doing its job and passing a budget would be to yield to blackmail. That is why he is not willing to discuss changing the Affordable Care Act with House Republicans as part of the current spending negotiations, he said.
“I will sit down and work with anyone in any party about anything at any time,” he said. Improving health care, reforming entitlement programs, and improving the tax code are all things he would discuss. “If reasonable Republicans want to discuss any of these things, I’m ready” … but extremists in the Republican party have to stop forcing John Boehner to issue threats against the economy.
“We can’t make extortion routine in our government,” said Obama.
On the same day, House Speaker John Boehner said he is willing to negotiate budget issues with Obama without any conditions.
The Ohio Republican told reporters Tuesday, “I’m not drawing any lines in the sand.”
The civics and economics lessons came as Obama defined what the debt ceiling means. It means honoring obligations the Congress has already authorized, he said. It means paying bills that already exist, not borrowing for the future.
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“Because it’s called raising the debt ceiling, some people think it means increasing the federal deficit, but it does not. Raising the debt ceiling is a lousy name,” so it’s always a tough vote, but people have voted to raise it 45 times since Ronald Reagan was in office, according to Obama.
“Our creditworthiness is one of the most valuable things we have,” said Obama. You don’t take default out for a test drive.
No one in business thinks it would not be a big deal if America did not pay its bills on time, according to Obama. Warren Buffett likened a default to the use of nuclear weapons, “too horrible to discuss,” said the president, as an example of the business view of a potential default.
While the president described their tactics as extortion, hard-line House Republicans dismissed dire warnings that a government default would wreck U.S. and world economies as another case of hyperbole from an Obama administration that cried wolf about the likely impacts of automatic spending cuts and partially shutting down the government.
Some conservative activists gleefully said they have shown that Americans can live without agencies Republicans like the least, such as the Environmental Protection Agency and the Internal Revenue Service.
In the House, conservatives now are challenging Treasury Secretary Jack Lew’s insistence that on Oct. 17 the United States will no longer be able to borrow, making a first government default imminent.
“I don’t think we’re ever going to default,” said Rep. Dennis Ross (R-Fla.). “We’ll always service our sovereign debt.”
Not true, said Lew. He said there is no option to prevent default “if we don’t have enough cash to pay our bills.”
While Treasury expects to have $30 billion cash on hand on Oct. 17, that money will be quickly exhausted in paying incoming bills, given that the government’s payments can amount to $60 billion on a single day, Lew said.
A sober analysis from Goldman Sachs, the banking, securities and investment firm, said Treasury’s cash balance could be depleted on any day after about Oct. 25. “At that point, it is possible that the Treasury would need to cease making payments in order to conserve the little remaining cash they would still have on hand,” the analysis said.
Some of the more conservative Republican House members don’t buy it.
“There’s no way to default,” Rep. Justin Amash (R-Mich.), said Tuesday. “There’s enough money coming into the Treasury to pay interest and to roll over principal.”
Associated Press contributed to this report.