WASHINGTON, (Reuters) – U.S. President Barack Obama called yesterday for new steps to spur job growth and tax hikes on the rich, hardening a stance that will likely complicate deficit reduction talks with Republicans.
The U.S. Senate will change its schedule to stay in session next week despite the July 4th holiday after the president challenged lawmakers to remain in town to deliver “substantial progress” on lifting the debt ceiling, one lawmaker said.
Obama’s call came as the International Monetary Fund and the Treasury Department urged Washington to reach a budget deal that would pave the way for Congress to raise the United States’ $14.3 trillion borrowing limit by Aug. 2.
Failure to increase the debt ceiling, which caps how much the United States can borrow, would likely trigger a default that could plunge the United States into a new recession and roil global financial markets, the Obama administration and economists warn.
Obama’s push for new construction loans and an extension of a payroll tax cut could further alienate Republicans already incensed by Democratic demands for new tax revenue.
Obama upped pressure on Republicans by tying them to tax breaks for “millionaires and billionaires” and referencing special treatment for corporate jets a half dozen times, while warning on the risk of default.
“If the United States government, for the first time, cannot pay its bills, if it defaults, then the consequences for the U.S. economy will be significant and unpredictable,” he told a White House news conference, reminding Republican Party backers on Wall Street of the stakes involved.
Standard and Poor’s rating agency told Reuters it would immediately cut the United States’ top-notch credit rating if it missed a $30 billion debt payment on Aug. 4.
With the country still struggling to emerge from the deepest recession since the 1930s, Obama said Congress needs to take steps to bring down the 9.1 percent unemployment rate even as it weighs medium-term austerity measures.
“There are more steps that we can take right now that would help businesses create jobs here in America,” he said.