Obama: seniors could be hurt without debt deal

WASHINGTON,  (Reuters) – President Barack Obama  warned yesterday that elderly Americans could suffer first  from a debt default, raising pressure on lawmakers as prospects  for a deal to lift the debt ceiling appeared far from reach.

Barack Obama

The president and congressional leaders met at the White  House for the third time in as many days, working to break a  logjam over taxes before Aug. 2. when the U.S. Treasury says it  will run out of money to pay all of the country’s bills.

Earlier Senate Republican leader Mitch McConnell proposed a  plan to allow a divided U.S. Congress to raise the U.S. debt  ceiling while giving Republicans political cover.

Adding to heated rhetoric from both sides, McConnell said a  “real solution” to the U.S. debt problem was unlikely while  Obama was in office. The White House, responding to the  comments, urged both sides to find common ground.

As politicians sparred, U.S. business leaders pressed  Washington to act swiftly to raise the $14.3 trillion U.S. debt  ceiling or risk derailing a sputtering economic recovery and  endangering the global financial system.

Obama said in an interview with U.S. television network CBS  before the meeting that checks to recipients of the Social  Security retirement program may not go out in early August if  he and congressional leaders do not agree on a debt deal.

“I cannot guarantee that those checks go out on August 3rd  if we haven’t resolved this issue,” Obama said, according to  excerpts of the interview released before its broadcast.
“There may simply not be the money in the coffers to do  it,” Obama said. He said veterans checks and disability  benefits could also be affected without a deal.

Failure to seal a deal by Aug. 2 could spook investors,  causing U.S. interest rates to surge and stock prices to  plummet, putting the United States at risk of another  recession, Treasury officials and economists have warned.

Yesterday’s talks lasted nearly two hours.

House of Representatives Speaker John Boehner, the top  Republican in Congress, told Fox News that Obama’s insistence  on tax increases as part of the plan was holding up a deal.

Republicans have balked at raising the debt limit without  steep spending cuts, while Democrats say new tax revenues need  to be part of any deal. Republicans oppose any increase in  taxes which they say would hurt the economy.
McConnell’s complicated legislative maneuver would avert an  imminent default and let Republicans wash their hands of the  politically toxic issue.

Obama would formally request an increase in the $14.3  trillion debt ceiling, which Congress would reject through a  “resolution of disapproval.”

Obama would then veto that resolution and send it back to  Congress. If Congress failed to muster the two-thirds vote  needed to override a veto, the debt ceiling would effectively  be lifted by the amount Obama had requested.

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