News24

Obama warns on debt

2011-07-13 12:05

Washington - President Barack Obama warned on Tuesday that elderly Americans could suffer first from a debt default, raising pressure on lawmakers as prospects for a deal to lift the debt ceiling appeared far from reach.

The president and congressional leaders met at the White House for the third time in as many days, working to break a logjam over taxes and spending cuts before August 02 when the US Treasury says it will run out of money to pay all of the country's bills.

Obama, who has said he would meet every day this week, will convene more debt talks on Wednesday at 16:00.

Republicans have balked at raising the debt limit without a deficit-cutting deal, but their leader in the Senate, Mitch McConnell, proposed a backup plan that would give Obama the option of raising the ceiling while avoiding spending cuts.

McConnell's complicated manoeuvre would also allow Republicans to duck a politically painful debt limit vote.

As politicians sparred, US business leaders pressed Washington to act swiftly to raise the $14.3 trillion US debt ceiling or risk derailing a sputtering economic recovery and endangering the global financial system.

Obama told CBS television in an interview that checks to recipients of the Social Security retirement program may not go out in early August if he and congressional leaders do not hammer out an agreement.

"I cannot guarantee that those checks go out on August 3rd if we haven't resolved this issue," Obama said, according to excerpts of the interview released before its broadcast.

Veiled threats

"There may simply not be the money in the coffers to do it," Obama said. He said veterans checks and disability benefits could also be affected without a deal.

Obama's warning that senior citizens - an active voting group - could suffer first if a deal was not reached could give lawmakers a nudge ahead of 2012 elections.

Reacting to Obama's comments, House Speaker John Boehner questioned whether Social Security checks would be cut off, asserting that the US Treasury can prioritise payments.

"I think it's way too early to be making some type of veiled threats like that," Boehner said on Fox News.

Seniors punished Democrats last year for including Medicare cuts in their healthcare package and then turned on Republicans in a special New York election this year over a Republican plan to overhaul the government healthcare program for the elderly.

It also evoked memories of the debt limit crisis of 1996 when Treasury Secretary Robert Rubin warned he would not be able to send out Social Security pension checks the next month if the ceiling were not raised. The Republican-controlled House immediately voted to allow the government to issue more debt to make those payments.

Little progress


Failure to seal a deal by August 02 could spook investors globally, causing U.S. interest rates to surge and stock prices to plummet, putting the United States at risk of another recession, Treasury officials and economists have warned.

As he laid out his debt-limit backup plan, McConnell said a "real solution" to the US debt problem was unlikely while Obama was in office.

Obama, in the CBS interview, chalked that up to "partisan politics", and White House spokesman Jay Carney said it was important to stay focused on a "unique opportunity to come to agreement on significant, balanced deficit reduction".

Carney also welcomed what the White House saw as a recognition by McConnell "that defaulting on America's past due bills is not an option".

A Democratic official close to the negotiations said Obama made a similar point about the McConnell plan during Tuesday's nearly two-hour meeting with congressional leaders.

The official, who spoke on condition of anonymity, said that after two tense meetings that focused on process, Obama sought to tone down the rancour and refocus the discussion on the substance of the deficit-reduction proposals.

Possible successor


McConnell's idea would allow only one-third of Congress - presumably Democrats - to raise the debt ceiling.

Under the proposal, Congress would reject Obama's debt-limit request, and Obama would veto the rejection. If Congress failed to muster the two-thirds vote needed to override a veto, the debt limit would effectively be lifted by the amount Obama requested.

Treasury Secretary Timothy Geithner, who has warned of catastrophic consequences if Congress fails to raise the debt ceiling, held firm on Tuesday to vows that the United States would not default. "Failure is not an option," he said.

New York Mayor Michael Bloomberg, mentioned as a possible successor to Geithner, also weighed in on the debate, saying a default would damage the US credibility around the world.

Comments
  • ZACommentator - 2011-07-13 12:22

    They only have themselves to blame. War has cost 'Americans' trillions over the past 2 decades. Fighting people in countries where they do not belong and propping up regimes such as Israel. I recently spoke to a Republican and asked them about the financial crisis, the healthcare reform bill and war. her response was: we are a capitalist country, we must look after ourselves but as a nation we must protect the world". She meant: poor black people in my country can die while I happily pay to rape and pillage other countries around the world. Sick

      CHIPPER_CHAP - 2011-07-13 12:49

      GROW UP ISRAEL HATER!

      McDaNife - 2011-07-13 13:14

      You should have thought about that before spending those trillions dollars hunting down Osama Bin Laden. You made the bed now sleep on it.

  • Mad man - 2011-07-13 12:31

    Go and rob oil countries to pay your debts - imperialists always resort to crime

  • The huntchback - 2011-07-13 12:47

    The war in Afghanistan alone has cost us tax payers in excess of 5,4trillion dollars, America = 1 Big bankrupt Supe Power ask the russians what comes next ! My predictions = The next supe Power = Israel. Israel with its history of war mongering will take the world into World War 3 very quickly and guess who will come out the winner ?????

      Realist72 - 2011-07-13 13:06

      @ The Hunchback: What are you talking about? Israel(Jews) have been the most persecuted people in History. Israel as it is today only came into existence in 1948 along with all it's Arab neighbors. And look at them now, wow, what a country of prosperity. Look at the 'War Mongering' Muslim neighbors, having more wealth than most countries in the world yet most of its people live in poverty. When WW III it will be an Islam nation that starts it ... most probably Iran! So get out from under the hatred spewing Islam propaganda and into the 21st century.

      Temp - 2011-07-13 13:19

      I suggest you take 'Realist' out of your name. I suppose that 'prosperity' you speak of has nothing to do with the United States giving BILLIONS in foreign aid annually to Israel.

      johan - 2011-07-13 13:24

      SA?

      Realist72 - 2011-07-13 13:38

      @Temp: Oh, excuse me. Look at Israel today, they have everything and that is a REALITY. They have infrastructure, democracy, freedom, everything a 1st world country has. They invented some of the best technology we use today (cell phones) and have the most Nobel prise winners of ALL nations.. REALITY! Where they got the money is not the issue. How they applied themselves and the money is exactly my point. Imagine if Israel had oil! The Arabs/Islamists who is so hell-bent on destroying Israel, has billions if not trillions, and yet have achieved not a 10th of what Israel has. Anyone attacking Israel gets their a$$es handed to them (Egypt/Syria/Jordania/Iran/Hamas, and the list goes on...) Unfortunately for you 'Temp' that IS the reality.

      static - 2011-07-13 14:02

      @ realist, Arabs are actually responsible for quite a bit of the technology we use today. Cameras and televisions are the the ideas of arabs, and many medical innovations came from the arab world. Distillation is also an idea from the arab world and not to mention soap! where would we be without soap! I can do without a cellphone but to bath without soap would be simply disgusting. so yes the arab contribution is significant.

      Realist72 - 2011-07-13 14:10

      @static: Yes, indeed you are right, there are some inventions that came from Arab countries. Comparing the invention of soap to the invention of a cell phone is quite ridiculous. The point I was trying to make was point out that Israel and it's neighbors all started as 'self governed countries' in the late 1940's and draw a comparison between them all. Israel has clearly done fare better than it's neighbors.

      I_Say - 2011-07-13 14:15

      @Realist72 Get real, Israel has grown in wealth under the same pricipals the Nazi's grew in wealth.... By stealing land ... Maybe there's a few Malema's in the Zionist movement?

      Mad Hatter - 2011-07-13 14:32

      Preventing another holocust , such asshol#s .

      Phantom - 2011-07-13 14:40

      All you Israel haters, your eyes will one day be opened. The whole existence of the Jewish nation today is a miracle, not even to mention Israel itself.

      Realist72 - 2011-07-13 15:14

      @I_Say: Stealing land you say? So you are also one of the brain-dead ... Did you miss the part of the 6 day war?? WAR? Who attacked whom? and who LOST? Come now, how stupid are you?

      Quickbeam - 2011-07-13 16:28

      Just one point @static - you could do without your cellphone could you? Really? Are you a goat herder in some small rural village with a PC and internet connection? Seriously dude... if you want to do any business and make any money, you pretty much have to have a cellphone!

      The huntchback - 2011-07-13 21:53

      Israeli is a succefull state because it has enslaved America, The American people are truly the slaves of Israel they have kept Israel alive! was it not for them there would be no Israel today!

      Liberty - 2011-07-14 08:43

      @huntchback your predictions are flawed. You have no idea how much money it takes, what size of military it takes, or how much political and economical influence is required to make it as a superpower on the world stage. Israel doesn't and will never have such capabilities. The only country approaching this kind of potential is China

      Liberty - 2011-07-14 08:48

      Oh and Israel has absolutely no hold on the US. They have nothing that the US could possibly want, except for the survival of the Jewish people.

  • Temp - 2011-07-13 13:23

    Notice how the threats come out against the elderly. The first things the US will drop in fallow times will be pension funds and the money which goes to veterans (White people). The millions which go to support José and Tyrone's habits and their various broods will of course go untouched, and the United States will be ground to dust before the billions in foreign aid to Israel is affected. How transparent these parasites are. They have done well to blind much of the world to their methods.

  • daaivark - 2011-07-13 14:51

    There are no such things as miracles, Phantom. People do things. with greater or lesser effect. Simple.

      Realist72 - 2011-07-13 15:27

      @daaivark: If what you say is true about miracles, then the fact that Israel WON the 6 day war when attacked by 3 different countries must mean that either, the Israel military is extremely good or the Egypt-, Jordanian- and Syrian military's are extremely pathetic. To add insult to injury when Israel AGAIN won the Yom Kippur war (1973) against 2 countries (Egypt and Syria). My money is on a 'miracle'.

  • Liberty - 2011-07-14 08:34

    The US government and the American people at large will have to take some painful measures to remedy this situation, much like a family overburdened with debt. Cut government spending, raise taxes and interest rates to get more money into the fiscus to reduce debt levels. And all these wars. Send the troops home and help them get the economy going again. Stop exporting American jobs to countries like India, Mexico and Brazil. Raising the debt ceiling is just a temporary measure that will lead to even bigger problems later on. It doesn't solve the problem

  • Thinus - 2011-07-18 18:56

    Hey guys & girls, maybe now is the time to check out the www.pickpocketeffectofcapitalism.com. Time to except reality! Debt is what has made the world go round since the introduction of the FIAT system!!!This system needs debt or it goes bankrupt. It is a system that cannot sustain itself. The next ressesion is around the corner, and man, will this one be great. So what should we do? Buy as much gold as you can with all your dollars, as the dollar is going to disappear like the Zim dollar. Then when the Amero hits the counters, sell all gold and buy Amero. Let's just say you will make a killing.

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