US President Barack Obama has warned Republicans of the consequences of refusing to raise the "debt-ceiling." While Republicans say Americans don't want more debt, the Treasury says stalling again would hurt the country.
President Obama called an unexpected press conference on Monday with a message aimed directly at the Republican majority in the House of Representatives, who had been showing signs this week of renewed in-fighting over how to tackle the United States' $16.4 trillion debt-ceiling.
"The issue here is whether or not America pays its bills," he said. "We are not a deadbeat nation. And so there's a very simple solution to this: Congress authorizes us to pay our bills."
Obama's speech came in response to the news that some Republicans would refuse to raise the debt ceiling - even preferring a temporary government shutdown - unless opponents would agree to spending cuts as a debt-reducing measure.
Congress reached a bipartisan agreement less than two weeks ago, which raised taxes on individual income earners in order to avert the so-called "fiscal cliff:" a series of across-the-board tax hikes and spending cuts, which experts feared would have plunged the US economy back into recession.
However, the legislative body delayed making a final decision on spending cuts and giving the government permission to borrow money in order to pay bills it has already incurred, commonly referred to as "raising the debt ceiling."
"What I will not do is to have that negotiation with a gun at the head of the American people," said Obama, adding he was willing to compromise, but unwilling to make a one-to-one trade.
"They will not collect a ransom in exchange for not crashing the American economy."
Following the press conference, House of Representatives speaker John Boehner defended his party's strategy.
"The American people do not support raising the debt ceiling without reducing government spending at the same time," said Republican John Boehner in a statement. The Republican Party holds nearly 54 percent of the seats in the House.
Treasury Secretary Timothy Geithner, who has announced his departure before Obama's second term begin next week, urged senators and representatives to find a viable solution.
Failing to do so would, "impose severe economic hardship on millions of individuals and businesses," he said.
The US is projected to default between mid-February and early March if Congress does not agree to raise the debt ceiling, according to the Treasury Department. Another failed negotiation could result in another downgrade for the US economy and dire consequences for Americans receiving federal dollars.
kms/ccp (Reuters, AFP)