WASHINGTON — Insisting he is “willing to compromise,” President Barack Obama called on US lawmakers Saturday to quickly forge a deal that would avert an early August debt default by the world’s richest nation.
Obama has warned of economic “Armageddon” should Congress fail to raise the debt limit to allow more US borrowing, with his administration highlighting disastrous ripple effects that would churn through the global financial system.
But after five straight days of crisis talks ended Thursday without a clear solution, by the weekend Obama was imploring his fellow Democrats and opposition Republicans to engage in “shared sacrifice” to help break a stalemate that has led ratings agencies and top US lender China to sound the alarm over US credit worthiness.
“I’m willing to compromise. I’m willing to do what it takes to solve this problem, even if it’s not politically popular,” Obama said in his weekly radio address.
“And I expect leaders in Congress to show that same willingness to compromise,” he added.
“Simply put, it will take a balanced approach, shared sacrifice, and a willingness to make unpopular choices on all our parts.”
On Friday he said he had given top lawmakers 24 to 36 hours to talk to their rank and file and return to him with a viable plan. That time window essentially ends mid-day Saturday.
The US government reached its debt limit of $14.29 trillion in May, and since then the Treasury Department has used special measures to allow the government to keep paying its bills.
But unless the limit is raised by August 2, the Treasury says, growing spending and debt service commitments will force a default.
On Friday, Obama renewed his call for a “grand bargain” which would cut domestic entitlement programs dear to Democrats.
“And it means taking on the tax code, and cutting out certain tax breaks and deductions for the wealthiest Americans,” said Obama, although Republicans have flatly rejected his call for higher taxes on the rich.
The president, sure to be judged in the 2012 elections based on his handling of the jobs-poor US economy, also signaled he would not reject a last-minute compromise key lawmakers were drafting behind closed doors.
“Let’s at least avert Armageddon,” he told a White House press conference.
Economists and finance and business leaders have warned that failure to raise the US debt ceiling by August 2 could send shock waves through a world economy still reeling from the 2008 collapse.
Ratings agencies Moody’s and Standard & Poor’s have warned they may downgrade Washington’s sterling Triple-A debt rating, and leading US creditor China, Wall Street titan JPMorgan Chase and the Federal Reserve have also sounded the alarm.
With the United States “running out of time,” as Obama put it, his top Republican foes in Congress called for votes next week on their plan for severe spending cuts on the way to amending the US Constitution to require cash-strapped Washington to balance its budget.
“Our jobs crisis and national debt require real action. So now the debate will move from a room in the White House to the House and Senate floors,” said Republican Senate Minority Leader Mitch McConnell.
“It’s time for the Democrats to get serious as well. We asked the president to lead. We asked him to put forward a plan — not a speech, a real plan — and he hasn’t. We will,” said Republican House Speaker John Boehner.
The long-shot Republican plan, all but certain to fail in the Democratic-led Senate, pleased conservative lawmakers close to the “Tea Party” movement that fiercely opposes raising the debt limit and seeks deep spending cuts.
In his Friday remarks, the president left open the door to a “fall-back position” being crafted by McConnell and Democratic Senate Majority Leader Harry Reid that would pair spending cuts with a debt limit increase, but called it the “least attractive option” apart from default.
That measure, described by aides who warned it was still in flux, would include some $1.5 trillion in spending cuts but would essentially let Obama raise the debt ceiling with only Democratic support in Congress.
Obama assailed the Republican refusal to support his call for raising taxes on the rich and wealthy corporations, warning a default would amount to “a tax increase on everybody” in the form of skyrocketing interest rates.
Republicans have argued that tax hikes would smother investment that feeds job growth at a time when the US economy faces stubbornly high unemployment of 9.2 percent.
US Senator Orrin Hatch of Utah, who delivered the weekly Republican address Saturday, restated the party’s opposition to tax hikes and stressed a balanced budget amendment to the US Constitution was “the only long-term solution.”