Posted by: Schuyler R. Thorpe | June 11, 2011

Obama Presses Republicans On Debt Cap

(The GOP want to kill off Medicare and Social Security. That’s THEIR idea of “solving” our nation’s problems…)

At White House, Obama presses Republicans on debt cap

WASHINGTON (Reuters) – President Barack Obama pressed Republicans to back an increase in the debt limit on Wednesday in a bid to end a standoff that the White House warns could upset financial markets.
Obama met Republicans from the House of Representatives a day after they defeated their own bill to raise the debt limit — a vote staged to strengthen their demand for huge cuts in federal spending. The deficit is expected to reach $1.4 trillion this year.

Republican lawmakers led by House Speaker John Boehner said Obama opened the meeting with a discussion about the debt limit. They, in turn, pressed him on creating private sector jobs to tackle a 9 percent unemployment rate, an issue that could hurt Obama in the 2012 White House race.

“I told the president: this is the moment, this is the window of opportunity … we can work together and solve this problem,” Boehner told reporters outside the White House.

The White House argues the United States would face “catastrophic” consequences — including a return to recession — if Congress does not raise the $14.3 trillion cap on government borrowing by August 2.

The Treasury said on Wednesday it was still on track to exhaust all borrowing capacity by August 2, risking a possible debt default unless Congress comes to an agreement over spending.

Republicans are skeptical that default is inevitable if government borrowing grinds to a halt and some question the disaster warnings the administration has been issuing all year. They insist that significant spending cuts accompany any deal on the debt ceiling.

In talks led by Vice President Joe Biden, both sides have identified tens of billions of dollars in possible spending cuts, but they must resolve a dispute over the biggest items. Democrats say they will not consider cuts to popular health benefits until Republicans consider tax increases.

“I asked the president…to keep out of the discussion surrounding the debt limit and in the Biden talks, any notion that we’re going to increase taxes,” said Eric Cantor, the number two Republican in the House.

“It is counter-intuitive to believe that you increase taxes on those individuals and entities you’re expecting to create jobs,” he said.

The Biden talks are slated to resume on June 9.

The Treasury Department has been tapping federal employee pensions and other funds to pay the nation’s bills since it reached the current debt limit on May 16.

Financial markets so far have shrugged off the lack of progress, but the White House has warned that could change as the August deadline approaches.

Benchmark 10-year Treasury bond rose on Wednesday, sending interest yields below 3 percent for the first time in nearly six months as fears of a weakening recovery renewed the safe-haven bid for debt.

“Everyone expects this to go to the wire,” said Eric Green, chief rates research and strategy at TD Securities in New York. “Between now and early August, the market is going to ignore what’s happening down there.”

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