Obama defends handling of crisis debt talks
US President Barack Obama defends his handling of crisis talks to avert a disastrous early August debt default in interviews Wednesday targeting voters in states crucial to his reelection bid.
Obama was also expected to hold another round of often acrimonious White House talks with fellow Democrats and his top Republican foes on raising the $14.3 trillion US debt limit by August 2, officials said.
And pressure rose for a breakthrough as Wall Street giant Goldman Sachs warned in a new analysis that the political battle appeared to be frightening US consumers into pulling back spending, a key engine of economic growth.
Goldman cited the University of Michigan consumer sentiment index, which plunged unexpectedly in its early July reading, as well as data showing sluggish consumer spending so far this year.
While that drop could be due to other factors, the investment giant said, “the extent, timing and composition suggests that the uncertainty surrounding the debt ceiling is probably a contributing factor.”
And while Goldman predicted a final deal would be reached, it also warned “any self-inflicted wounds are particularly unwelcome” with the US economy already operation at “stall speed.”
The Democratic-held Senate was preparing for a vote this week on a House-passed Republican bill demanding draconian spending cuts and a balanced budget amendment to the US Constitution as the price for averting default.
Democratic Senate Majority Leader Harry Reid noted the measure, which Obama has vowed to veto, “didn’t stand a chance” in the Senate and urged a compromise approach, warning: “We cannot default on our debt.”
Republican leaders “have got to become real and send something to us, or we’ll send something to them, we’ll agree in the interim on something that will extend the debt,” Reid said in remarks on the floor of the chamber.
Obama was to discuss “the economy and the importance of finding a balanced approach to deficit reduction” in appearances with television stations in vote-rich California, Ohio, and Missouri, the White House said.
The sessions brought to 34 the number of interviews the president has done since formally launching his reelection campaign on April 4, according to statistics kept by CBS news.
Republicans have hammered Obama for his handling of the US economy, which still faces historically high unemployment of about 9.2 percent as it struggles to recover from the worst recession since the Great Depression of the 1930s.
But polls show that US voters are reluctant to blame Obama, whose bid for a second term in the November 2012 elections will hinge on voter perceptions of the economy, for sluggish growth and high unemployment.
Obama’s charm offensive came as a new US public opinion poll on the politics of the debt-ceiling fight brought glum news to the president and worse news to his Republican foes with time running short to defuse the standoff.
The Washington Post-ABC news survey found 42 percent of respondents said they would blame Republicans in the event of a default, while 36 percent pointed the finger at Obama.
And while 57 percent of respondents disapproved of Obama’s handling of the economy, and 60 percent disliked his handling of the deficit, Republicans fared worse with 67 percent and 68 percent disapproving, respectively.
The poll had an error margin of plus or minus 3.5 percentage points.
Washington hit its $14.3 trillion debt ceiling on May 16 and has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating normally, but can only do so until August 2.
Finance and business leaders have warned failure to raise the US debt ceiling by then could send shock waves through a world economy still reeling from the 2008 collapse, while Obama has predicted economic “Armageddon.”
Reid and Republican Senate Minority Leader Mitch McConnell were working on a plan that would let the president raise the debt ceiling by $2.5 trillion in three increments with just Democratic votes.
And Obama on Tuesday highlighted a new plan by a bipartisan “Gang of Six” senators that aims to slash the swollen US budget deficit by some $3.7 trillion over 10 years and boost revenues by $1 trillion by closing tax loopholes and ending some tax breaks.
Republicans and key Democrats including Reid gave that approach a cool welcome, and its impact on the overall negotiations was unclear.