Obama: Failure to Raise US Debt Ceiling Will Cause Incalculable Damage

Posted July 25th, 2011 at 9:55 pm (UTC-5)
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President Barack Obama says failing to raise the debt ceiling will cause incalculable damage to the U.S. economy.

Mr. Obama spoke to the nation Monday night, hours after Republican and Democratic leaders in Congress unveiled rival plans to cut government spending and raise the debt ceiling to avoid default.

Weeks of failed negotiations between the White House and Congress have left the country facing what the president called a dangerous stalemate. He said default would be a reckless and irresponsible outcome.

He criticized conservative Republicans for wanting to solve the debt crisis with just spending cuts without asking corporations and the wealthiest Americans to contribute through changes in the tax code.

The president rejected a plan announced earlier Monday by Republican House Speaker John Boehner. The Boehner plan would immediately increase the debt ceiling by $1 trillion and cut spending by $1 trillion. Mr. Obama said this would be a short term fix.

Boehner again Monday night came out in favor of a balanced budget amendment to the U.S. Constitution. He said in a televised address that this would stop Washington from spending money it does not have. He also accused Mr. Obama of not looking for compromise.

The White House earlier said it backs a rival plan by Senate Democratic leader Harry Reid. His plan includes $2.7 trillion in cuts and would raise the debt ceiling through next year's general election.

If there is no plan to let the federal government keep borrowing money by August 2, the country would default on its debt. The Treasury could not pay its investors and interest rates would rise for anyone seeking loans from U.S. banks. The government also would be unable to meet such obligations as Social Security checks to retirees and to fulfill corporate contracts.