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Don’t Use Debt Ceiling as Weapon, Obama Tells G.O.P. Obama Appeals to Business for Support on Tax Plan
(about 7 hours later)
WASHINGTON — President Obama warned Republicans on Wednesday not to use the debt ceiling as leverage on spending and tax decisions, saying he refused to engage again in the sort of brinkmanship that brought the country close to default last year and damaged its credit rating. WASHINGTON — After a campaign that drove a deep wedge between them, President Obama is now trying to rebuild relations with the business community in hopes of enlisting the private sector in his showdown with Republicans in Congress over the looming fiscal crisis.
In a speech to the Business Roundtable, Mr. Obama called that irresponsible. “That is a bad strategy for America, it’s a bad strategy for your businesses and it is not a game that I will play,” he said. “Everybody here is concerned about uncertainty. There’s no uncertainty like the prospect that the United States of America, the largest economy, that holds the world’s reserve currency, potentially defaults on its debts.” Through phone calls, White House invitations and old-fashioned political flattery, Mr. Obama has dispensed with the populist language of the campaign trail in favor of an appeal to corporate America’s palpable desire for certainty. In groups and one by one, the president is making a case to business leaders that siding with him will put the nation back on a firm fiscal footing and unleash the economy.
While saying he would not “play that game,” a phrase he repeated, Mr. Obama did not say what he would do in response, but some Democrats have urged him in the past to simply raise the borrowing limit using his own executive authority and let the courts determine if he overstepped his constitutional bounds. “What’s holding us back right now, ironically, is a lot of stuff that’s going on in this town,” Mr. Obama told the Business Roundtable, an influential group of corporate leaders, on Wednesday. “And I know that many of you have come down here to try to see, is there a way that we can break through the logjam and go ahead and get things done? And I’m here to tell you that nobody wants to get this done more than me.”
He seemed to embrace a suggestion by John Engler, the Business Roundtable president, to raise the debt ceiling enough to last five years. “John is exactly right when he says that the only thing that the debt ceiling is good for as a weapon is just to destroy your credit rating,” Mr. Obama said. White House officials have been encouraged by what they describe as a more positive reaction than might have been expected. Many chief executives who visited Mr. Obama during a private meeting at the White House last week told him that they would go along with his proposal to raise taxes on the wealthy. And several have come out publicly for the plan as long as there is also a concerted effort to tame the growth of entitlement spending.
Mr. Obama was reacting to reports that Republican leadership officials were looking for a fallback in the current debate to avert an end-of-the-year fiscal crisis. Some Republicans foresee accepting Mr. Obama’s call to extend Bush-era tax cuts for the middle class while allowing them to expire for the wealthiest Americans, and then taking up the fight again when the nation’s debt rises to the point that the statutory borrowing limit needs to be raised again, which could be in late January or February. Frederick W. Smith, the chief executive of FedEx and a supporter of former President George W. Bush and Senator John McCain, said it was “a lot of mythology” that “you’ll kill jobs” by raising tax rates on the wealthy. Lloyd C. Blankfein, the chief executive of Goldman Sachs, called Mr. Obama’s deficit reduction plans “very credible” and said that he “wouldn’t preclude” higher tax rates on higher income. Randall Stephenson, the chief executive of AT&T, called for “a compromise involving an increase in both tax rates” and “significant steps to reform entitlements and rein in federal spending.”
Republicans view any vote to raise the debt ceiling as a chance to enforce more fiscal discipline on Mr. Obama. Speaker John A. Boehner has said any increase in borrowing capacity should be offset by spending cuts that exceed the increased debt. Mr. Obama has responded by proposing to take away the Congressional power to approve increases in the debt ceiling, but Mr. Boehner said last weekend that “Congress is never going to give up this power.” While plenty of business leaders oppose Mr. Obama’s plans, the White House hopes that statements like these help crack Republican solidarity by making clear to lawmakers that a critical constituency for their party is ready to make concessions to settle the fiscal issues.
Appearing before reporters on Wednesday, Mr. Boehner and other House Republican leaders implored Mr. Obama to sit down with them and begin negotiating in earnest to head off the looming fiscal crisis, but with flattery and aggravation, they made it clear that they were now playing on his turf. “There are a lot of people in there who support the Republican Congress, who were ‘super PAC’ donors to Mitt Romney, yet they want a solution here,” David Plouffe, the president’s senior adviser, said after the Business Roundtable visit. “A lot of them have special influence in the Republican Party, and if they’re telling Republican leaders and members that they have to compromise, that’s going to have a real effect.”
Mr. Boehner and his leadership team did not give an inch on their opposition to raising tax rates on the wealthy or their insistence that any deficit-reduction plan emphasize spending cuts. But the speaker sounded exasperated as he insisted that he had moved toward the president’s position by agreeing to $800 billion in higher tax revenue over 10 years. Still, it is not clear how many business leaders will go beyond private reassurances and bland resolve-the-crisis public statements to actually lobby Republicans. Party leaders in the House argue that allowing tax rates to rise on anyone would strangle an already fragile economy and hurt small businesses.
“The revenues we’re putting on the table will come from guess who? The rich,” he said, his voice rising. “There are ways to limit deductions, close loopholes and have the same people pay more of their money to the federal government without raising tax rates.” Moreover, some conservatives are as distrustful of corporate America as they are of big government. Such conservatives argue for a cleaner, simpler tax code that gets rid of special tax breaks favored by various companies and industries.
Representative Peter Roskam of Illinois, a member of the Republican leadership, appealed to Mr. Obama’s own view of himself as a politician able to rise above partisanship, a characterization Republicans have rarely, if ever, agreed with. “Large corporations are seekers of welfare as much as anybody,” said Chris Chocola, president of the Club for Growth, a conservative antitax group. “When he has all these guys to the White House, it’s not surprising that they agree with the president. They helped create the current system, and they have a vested interest in a sense in making it worse.”
“I’ve seen an attribute in President Obama when we served together in the Illinois State Senate, where he was able to rise above donkeys and elephants and transform some very controversial issues in a way that was powerful,” Mr. Roskam said, imploring the president to eschew the politics of the victor and seize “an unbelievable opportunity to be a transformational president, that is to bring the country together.” Mr. Obama’s argument to business leaders focuses on stability, saying that even if they oppose his plans, they should want the fiscal crisis resolved for the sake of the economy. He also is promising them that he will consider a broader overhaul of the tax code next year that could even lower corporate tax rates in exchange for eliminating special breaks.
The dueling public appearances underscored how far apart the two sides were, at least as a matter of principle. Mr. Obama’s plan calls for $1.6 trillion in new taxes over 10 years, mainly through allowing rates to rise on income above $200,000 a year for individuals or $250,000 for families. He has also revived a year-old plan to trim health care and other mandatory spending by $600 billion over 10 years, but he also wants to spend $50 billion in the short term to help the economy. During his speech to the Business Roundtable, Mr. Obama warned that Republicans might again use a vote on raising the debt ceiling as leverage in the fiscal fight, much like last year.
Mr. Boehner has countered with a plan, more focused on spending cuts, that limits new tax revenue to $800 billion over 10 years, raised through closing loopholes, ending tax breaks and restricting deductions, but keeping the Bush-era rates across the board. His plan envisions spending cuts of $1.4 trillion over 10 years, including curbing increases in entitlement programs like Medicare and Social Security. “That is a bad strategy for America, it’s a bad strategy for your businesses and it is not a game that I will play,” Mr. Obama said. “Everybody here is concerned about uncertainty. There’s no uncertainty like the prospect that the United States of America, the largest economy that holds the world’s reserve currency, potentially defaults on its debts.”
Mr. Obama’s visit to the Business Roundtable was meant to enlist the support of private-sector leaders who have been wary to openly hostile toward him, making the case to them that the tax increases he proposes would not harm their businesses, but uncertainty would. Shortly after he finished, the markets rose modestly. The administration brought home the possibility that a painful series of automatic tax increases and spending cuts will go into effect with the new year if the two sides do not reach an agreement. The White House Office of Management and Budget sent a notice to agencies this week requesting information about how they would institute the deep spending cuts required if there is no deal.
He presented himself as a friend of business, despite regulatory and tax policies that have alienated many in the private sector. “I am passionately rooting for your success,” he told the corporate titans, “because if the companies in this room are doing well, then small businesses and medium-sized businesses up and down the chain are doing well.” Republicans called on Mr. Obama to dispense with the public campaign and sit down with them to begin serious negotiations. Speaker John A. Boehner and his Republican leadership team did not give an inch on Wednesday on their opposition to raising tax rates or their insistence that any deficit-reduction plan emphasize spending cuts.
While highlighting what he saw as positive signs that the economy was doing better, including on housing and consumer confidence, he said the fiscal crisis could throw the country in reverse. But he rejected the Republican notion that the country could raise enough tax revenue without actually raising rates. But the speaker sounded exasperated as he insisted that he had moved toward the president’s position by agreeing to $800 billion in higher tax revenue over 10 years by curtailing tax breaks. “The revenues we’re putting on the table will come from guess who? The rich,” he said, his voice rising. “There are ways to limit deductions, close loopholes and have the same people pay more of their money to the federal government without raising tax rates.”
“It is possible to do, theoretically,” he said, modifying his past stance that it was not possible mathematically. “It is not possible to do as a practical matter.” By that, he meant that it would require eliminating or severely limiting popular deductions like the one for charitable contributions, which could hurt nonprofit causes. Republicans argued that Mr. Obama’s plan was antibusiness, citing a study showing that it would cost 700,000 jobs. “Raising rates will hurt the very people that we’re expecting to help create jobs in our country,” Mr. Boehner said.
Mr. Obama argued that if Republicans accepted his plan to raise tax rates, the rest of a deal could come together quickly. “We can probably solve this in about a week,” Mr. Obama said. “It’s not that tough. But we need that conceptual breakthrough that says we need to do a balanced plan.” Mr. Obama’s outreach to business leaders began shortly after an election in which he effectively ran against corporate America and corporate America poured hundreds of millions of dollars into defeating him.
The president has held two meetings with chief executives at the White House and a third with small-business owners and called other business leaders individually. He has stopped by other meetings his aides have held with executives, and he gave his first television interview since his re-election this week to the business-oriented Bloomberg Television.
“We’re making sure they understand where the president’s coming from,” Mr. Plouffe said, “and that we strongly believe it’s in the economy’s and country’s interest to get a deal.”

Jonathan Weisman contributed from Washington, and Nelson D. Schwartz from New York.