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| Barack Obama signals hard line in debt ceiling talks with Republicans | Barack Obama signals hard line in debt ceiling talks with Republicans |
| (8 days later) | |
| President Barack Obama signalled on Saturday that he would be pushing a hard line in future talks with Republicans over the looming issue of raising America's debt ceiling. | President Barack Obama signalled on Saturday that he would be pushing a hard line in future talks with Republicans over the looming issue of raising America's debt ceiling. |
| After narrowly averting a crisis over the so-called fiscal cliff – a series of tax rises and spending cuts designed to force action to reduce the country's huge deficit – the US is now facing a second threat to its tepid economic recovery. | After narrowly averting a crisis over the so-called fiscal cliff – a series of tax rises and spending cuts designed to force action to reduce the country's huge deficit – the US is now facing a second threat to its tepid economic recovery. |
| Though raising the debt ceiling and allowing the government to continue borrowing money has historically been a routine affair, the Republican party is committed to securing major government spending cuts as part of any deal to do so this time. | Though raising the debt ceiling and allowing the government to continue borrowing money has historically been a routine affair, the Republican party is committed to securing major government spending cuts as part of any deal to do so this time. |
| However, if talks fail to secure a deal the US could default on its debt and trigger a major global financial crisis. In 2011, uncertainty over similar brinkmanship, which only ended after a last-minute deal was secured, caused America's credit rating to be downgraded. | However, if talks fail to secure a deal the US could default on its debt and trigger a major global financial crisis. In 2011, uncertainty over similar brinkmanship, which only ended after a last-minute deal was secured, caused America's credit rating to be downgraded. |
| Obama, fresh from what some have seen as a victory in the fiscal cliff talks, said in his weekly address Saturday that he would not tolerate any threat to raising the debt ceiling by the Republican-controlled House of Representatives. | Obama, fresh from what some have seen as a victory in the fiscal cliff talks, said in his weekly address Saturday that he would not tolerate any threat to raising the debt ceiling by the Republican-controlled House of Representatives. |
| "If Congress refuses to give the United States the ability to pay its bills on time," Obama said, "the consequences for the entire global economy could be catastrophic. The last time Congress threatened this course of action, our entire economy suffered for it. Our families and our businesses cannot afford that dangerous game again." | "If Congress refuses to give the United States the ability to pay its bills on time," Obama said, "the consequences for the entire global economy could be catastrophic. The last time Congress threatened this course of action, our entire economy suffered for it. Our families and our businesses cannot afford that dangerous game again." |
| He added: "One thing I will not compromise over is whether or not Congress should pay the tab for a bill they've already racked up." | He added: "One thing I will not compromise over is whether or not Congress should pay the tab for a bill they've already racked up." |
| Obama's stance puts him on a collision course with Republicans who are implacably opposed to raising the limit without massive spending cuts. On Friday the newly re-elected House speaker, John Boehner, told a closed-door meeting of Republicans that he will insist on a dollar-per-dollar match between spending reductions and continued borrowing. The Kentucky senator Mitch McConnell, who leads Republicans in the Senate, has expressed similar sentiments. | Obama's stance puts him on a collision course with Republicans who are implacably opposed to raising the limit without massive spending cuts. On Friday the newly re-elected House speaker, John Boehner, told a closed-door meeting of Republicans that he will insist on a dollar-per-dollar match between spending reductions and continued borrowing. The Kentucky senator Mitch McConnell, who leads Republicans in the Senate, has expressed similar sentiments. |
| Obama said he was open to spending cuts but not so deep that they threatened economic development. He also said cuts needed to go hand in hand with upping tax revenue. | Obama said he was open to spending cuts but not so deep that they threatened economic development. He also said cuts needed to go hand in hand with upping tax revenue. |
| "Spending cuts must be balanced with more reforms to our tax code. The wealthiest individuals and the biggest corporations shouldn't be able to take advantage of loopholes and deductions that aren't available to most Americans," he said. | "Spending cuts must be balanced with more reforms to our tax code. The wealthiest individuals and the biggest corporations shouldn't be able to take advantage of loopholes and deductions that aren't available to most Americans," he said. |
| Most observers believe the showdown over the debt ceiling, which has already been breached, causing the federal government to use other measures to continue meeting its spending commitments for the short term, could have far more serious economic consequences than the fiscal cliff crisis. | Most observers believe the showdown over the debt ceiling, which has already been breached, causing the federal government to use other measures to continue meeting its spending commitments for the short term, could have far more serious economic consequences than the fiscal cliff crisis. |
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