As the United States yet again faces the prospect of defaulting on its debt, President Barack Obama announced Monday he will not negotiate with Republicans on the debt ceiling. He said the ceiling must first be raised and then he can discuss longer-term strategies to reduce the deficit with Congress.
If the country's borrowing limit is not raised, the United States risks further damage to an already weak economy—possibly including another recession and a further downgrade to the country's credit rating. In 2011 when the United States was on the brink of defaulting on its loans, its credit rating was reduced for the first time ever. Obama said the country cannot again risk such consequences:
There is no simpler solution—no ready, credible solution—other than Congress either give me the authority to raise the debt ceiling or exercise the responsibility that they have kept for themselves and raise the debt ceiling.
Over the weekend the Obama administration ruled out the idea of minting a trillion dollar coin to pay the nation's bills, as had been suggested by some on the left. Coin proponents had suggested that the Treasury Department mint a $1 trillion coin that would be deposited in the federal government's account and used to pay its bills.
Obama said the GOP cannot continue to use the country's financial well-being as "leverage." Republicans say they will not agree to an increase in the debt ceiling without serious spending cuts, something they were unable to achieve as part of a deal to avert the fiscal cliff January 1. They say the federal budget must be cut one dollar for each dollar the debt ceiling is raised.
"The president and his allies need to get serious about spending, and the debt-limit debate is the perfect time for it," said Republican Senate Minority Leader Mitch McConnell of Kentucky in response to Obama's remarks. "I do know that the most important issue confronting the future of our country is our deficit and debt."
The Treasury Department is taking "extraordinary measures" that is allowing the government to finance its spending for about two more months, so President Obama and Congress have until late February or early March to reach an agreement on the debt ceiling.
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- Read the U.S. News Debate: Was the Treasury and the Fed Right to Take the $1 Trillion Coin Off the Table?
- Read Susan Milligan: Obama Acting on the Debt Ceiling Is No Power Grab
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