By David Lawder, Reuters
WASHINGTON — Congressional Republicans, frustrated by the failure of earlier efforts to get President Barack Obama to agree to spending cuts, suddenly find themselves in a fight to keep their grip on the one tool they thought would give them better leverage: Their threat to block an increase in the government’s ability to borrow money next month. That became clear on Monday as Obama used the last news conference of his first term for his most dire — and least wonky — portrayal yet of the woes that would befall the nation if the debt ceiling is not extended.
Rather than dwell on the impact of debt default on credit ratings that many people don’t fully understand, Obama spoke instead of troops, retirees and air traffic controllers all being without their paychecks should Republicans make good on their threat. “If congressional Republicans refuse to pay America’s bills on time, Social Security checks and veterans’ benefits will be delayed,” Obama said.
“We might not be able to pay our troops, or honor our contracts with small business owners. Food inspectors, air traffic controllers, specialists who track down loose nuclear material wouldn’t get their paychecks.” “Markets could go haywire. Interest rates would spike for anybody who borrows money — every homeowner with a mortgage, every student with a college loan, every small business owner who wants to grow and hire.” Rather than try to explain how failing to raise the debt ceiling would impact borrowing, he compared it with eating “all you want” at a restaurant and then leaving “without paying the check.” Bargaining Chip The escalation (and simplification) of Obama’s rhetoric is designed by his own acknowledgement to take the debt limit entirely out of play as a bargaining chip by making it too hot to handle and thus nonnegotiable.
Once having uncoupled it from the ongoing debate about spending, he can move on to the next controversy. That would mean negotiations about automatic spending cuts postponed for two months in January’s fiscal cliff deal and a less volatile debate at the end of March over continued funding of the government. The United States scraped up against its US$16.4 trillion debt ceiling on Dec. 31 and is now employing special measures to meet its financial obligations. The Treasury Department said those steps could be exhausted by mid-February. In response, Republicans are arguing that use of the debt ceiling as a bargaining tool is routine and that the consequences of refusing to raise it manageable. Rather than prompting a default and an economic calamity decried by Democrats, these lawmakers say it will merely lead to a temporary shutdown of some government departments and programs — one that could jolt Obama into a meaningful deficit reduction deal. Senator Jeff Sessions of Alabama, the top Republican on the Senate Budget Committee, said in an interview with Reuters last week that it would lead to “temporary disruptions,” that would be blamed on Obama for refusing to bring down spending.