New debt ceiling discussion thread

President Barack Obama and Republicans in the U.S. House are still on a collision course over the debt ceiling, which needs to be raised sometime in the next month or two.

Obama promised at a press conference today that he will not get drawn into negotiations over raising the debt ceiling.

In the final news conference of his first term, Obama said Republicans were threatening to hold “a gun at the head of the American people” and that he would not trade spending cuts, as Republicans demand, for an agreement to raise the federal debt ceiling.

“If congressional Republicans refuse to pay America’s bills on time, Social Security checks and veterans benefits will be delayed. We might not be able to pay our troops,” Obama said, ratcheting up the rhetoric over the looming deadline to raise the $16.4 trillion debt ceiling.

“Investors around the world will ask if the United States is, in fact, a safe bet. Markets could go haywire,” he said. “It would be a self-inflicted wound on the economy. It would slow down our growth, might tip us into recession. And ironically it would probably increase our deficit.” […]

Obama said he still wanted to reach a compromise to stabilize borrowing over the long term but that willingness to negotiate does not extend to the debt ceiling, which covers obligations that Congress has already incurred.

The White House has ruled out unilateral action to raise the debt ceiling by invoking the 14th Amendment, and the U.S. Treasury has ruled out minting a trillion-dollar platinum coin to get around Congress. Sometime between mid-February and early March, the U.S. is expected to become unable to pay all its bills on time.

Congressional Republicans still refuse to pass a “clean” increase in the debt ceiling.

Senate Minority Leader Mitch McConnell (R-Ky.) responded to Obama’s remarks with a statement that said the White House and its allies “need to get serious about spending, and the debt-limit debate is the perfect time for it.”

Speaker John Boehner (R-Ohio) vowed the House would pass legislation that increases the debt limit and cuts spending.

“The American people do not support raising the debt ceiling without reducing government spending at the same time,” he said in a statement. “The consequences of failing to increase the debt ceiling are real, but so too are the consequences of allowing our spending problem to go unresolved.”

Meanwhile, Daniel Newhauser reported today for Roll Call,

House Republican leaders are considering a four-year debt limit increase that would take the issue off the table for the rest of President Barack Obama’s presidency.

The plan would, however, come at no easy price for Obama, who pledged as recently as Monday morning not to negotiate with Republicans on a debt ceiling hike. Republicans would demand major tax and entitlement reforms – the latter of which has been anathema to many Democrats – and they could also ask for movement on the sequester and an expiring continuing resolution that must be dealt with in the next three months.

When Bill Clinton was president, a government shutdown backfired on Congressional Republicans led by then House Speaker Newt Gingrich. Obama seems to be banking on that scenario, whereas Republicans are counting on the president to cave before things go that far. Past events suggest that Obama will “reluctantly” agree to the demands of “irresponsible” Republicans in order to avoid economic disaster.

Senator Chuck Grassley was the guest on Iowa Public Television’s “Iowa Press” program this weekend, and James Lynch of the Cedar Rapids Gazette asked him about these negotiations.

Lynch: Senator, another issue you’re facing in Washington when you go back to Congress will be the fiscal cliff which seems to have become the fiscal cliffhanger with more deadlines looming in the coming months on sequestration and the debt ceiling.  What do you expect to happen here?  Is this just a continuing argument between the parties going ad infinitum?

Grassley: I hope not.  But before I say that I probably ought to go back to what Kay brought up and you brought up and it fits in right now with your question.  I think it is very, very important that a lot of issues in Congress are second to this whole fiscal cliff issue, the debt limit increase debate and also another thing we don’t talk about much yet but by March 27th we’ve got the continued resolution coming to an end so how do you fund the rest of the government?  Those three things have to come up between now and March 2nd and March 27th and they are much more important than all these other issues that we probably will talk about in this news conference.  So, my answer to your question is that I think that it needs to be done if we’re not going to reduce the credit rating of the United States as some threat has been.  But most importantly the creation of jobs and to make sure that we leave a strong economy for future generations to build on and deal with it all.  And more importantly than just dealing with the fiscal cliff which deals with about 40% of all the money we spend, we need to get engaged in this the debate about Social Security, Medicare and Medicaid because that is 44% of the spending and nobody wants to touch that.  And if you really want to preserve these programs, and I do want to preserve them and strengthen them, as part of the social fabric of our society, we have to deal with that 44% as well.

Borg: Another thing — go ahead.

Lynch: I was just going to say House republicans have shown reluctance to raise the debt ceiling, the spending limit.  Do you think the President has the authority to do that on his own?  And do you think he would take that step?

Grassley: You’re talking about the 14th amendment provision.  I read the 14th amendment because this is a part of the 14th amendment you tend to forget about.  So I just recently went back and read it and it seems to me that the authority that comes from the 14th amendment to our federal government is related to preserving the benefits of people that fought against the resurrection which was a civil war.  It seemed to me connected to that very much that the fiscal integrity of the federal government isn’t used to help those who rebelled against us as well as to protect those who fought to preserve the union.  And so I see it unrelated but it keeps coming up.  Now I haven’t read, I don’t think there’s any constitutional law on it, court cases but that is my reading of it.

During the last debt ceiling showdown in the summer of 2011, Grassley indicated that the Constitution might allow the president to raise the debt ceiling without Congressional action.

Any relevant comments or speculation are welcome in this thread.

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