Obama, Republicans clash over US debt limit increase

Reuters: If Republican and Democratic leaders want to avoid a reprise of last year’s nasty showdown over raising the federal debt limit, they are not off to a good start.

After meeting with President Barack Obama and senior Democratic lawmakers over lunch at the White House on Wednesday, top Republicans came away thinking the Democratic president does not want new spending cuts to accompany any legislation to increase the debt limit.

Democrats disputed the accuracy of that impression, but such a stance by Obama would put Democrats on a fiscal collision course with Republican House of Representatives Speaker John Boehner, who, according to aides, told the president that “I’m not going to allow a debt ceiling increase without doing something serious about the debt.”

After the meeting, White House spokesman Jay Carney did not specify whether Obama would refuse to consider spending cuts as part of a plan to increase the debt limit.

But Carney said Obama made it clear to Boehner “that we’re not going to re-create the debt ceiling debacle of last August.”

The lengthy stalemate between Congress and the White House over raising the debt ceiling last summer brought the United States to the brink of a historic default, and led Standard and Poor’s to downgrade the triple-A US credit rating.

The episode did not push up interest rates, but economists say the uncertainty it created contributed to a slowdown in economic growth last year.

The US Treasury is now expected to reach the $16.4 trillion debt limit sometime between the November 6 election and early 2013, an event that eventually would halt government borrowing, force shutdowns of many operations and threaten the government’s ability to repay maturing debt.

“It is simply not acceptable to hold the American and global economy hostage to one party’s political ideology,” Carney said, an apparent reference to compromise-resistant Republicans in Congress who will not accept any tax increases as part of a plan to trim the government’s debt

Carney added that Obama wanted a “balanced approach” to deficit reduction – a phrase Democrats have used to refer to tax increases on the wealthy alongside spending cuts.

Disagreement over Obama’s stance

Besides Obama and Boehner, Wednesday’s meeting over Italian-style sandwiches included House Minority Leader Nancy Pelosi and Senate Majority Leader Harry Reid, both Democrats, and Senate Minority Leader Mitch McConnell, a Republican.

The meeting took place a day after Boehner issued a demand that any increase in federal borrowing authority be exceeded by spending cuts.

A Boehner aide said the speaker asked Obama at the White House on Wednesday whether he was proposing that Congress pass a debt limit increase without spending cuts.

“The president said, ‘Yes,’” the aide said.

That assertion about Obama’s position was later disputed by Pelosi and other Democrats.