THE PRESIDENT: Good afternoon, everybody. Congress has now approved a compromise to reduce the deficit and avert a default that would have devastated our economy. It was a long and contentious debate. And I want to thank the American people for keeping up the pressure on their elected officials to put politics aside and work together for the good of the country.
This compromise guarantees more than $2 trillion in deficit reduction. It’s an important first step to ensuring that as a nation we live within our means. Yet it also allows us to keep making key investments in things like education and research that lead to new jobs, and assures that we’re not cutting too abruptly while the economy is still fragile.
This is, however, just the first step. This compromise requires that both parties work together on a larger plan to cut the deficit, which is important for the long-term health of our economy. And since you can’t close the deficit with just spending cuts, we’ll need a balanced approach where everything is on the table. Yes, that means making some adjustments to protect health care programs like Medicare so they’re there for future generations. It also means reforming our tax code so that the wealthiest Americans and biggest corporations pay their fair share. And it means getting rid of taxpayer subsidies to oil and gas companies, and tax loopholes that help billionaires pay a lower tax rate than teachers and nurses.
I’ve said it before; I will say it again: We can’t balance the budget on the backs of the very people who have borne the biggest brunt of this recession. We can’t make it tougher for young people to go to college, or ask seniors to pay more for health care, or ask scientists to give up on promising medical research because we couldn’t close a tax shelter for the most fortunate among us. Everyone is going to have to chip in. It’s only fair. That’s the principle I’ll be fighting for during the next phase of this process.
And in the coming months, I’ll continue also to fight for what the American people care most about: new jobs, higher wages and faster economic growth. While Washington has been absorbed in this debate about deficits, people across the country are asking what we can do to help the father looking for work. What are we going to do for the single mom who’s seen her hours cut back at the hospital? What are we going to do to make it easier for businesses to put up that “now hiring” sign?
That’s part of the reason that people are so frustrated with what’s been going on in this town. In the last few months, the economy has already had to absorb an earthquake in Japan, the economic headwinds coming from Europe, the Arab Spring and the [rise] in oil prices -- all of which have been very challenging for the recovery. But these are things we couldn’t control. Our economy didn’t need Washington to come along with a manufactured crisis to make things worse. That was in our hands. It’s pretty likely that the uncertainty surrounding the raising of the debt ceiling -- for both businesses and consumers -- has been unsettling, and just one more impediment to the full recovery that we need. And it was something that we could have avoided entirely.
So, voters may have chosen divided government, but they sure didn’t vote for dysfunctional government. They want us to solve problems. They want us to get this economy growing and adding jobs. And while deficit reduction is part of that agenda, it is not the whole agenda. Growing the economy isn’t just about cutting spending; it’s not about rolling back regulations that protect our air and our water and keep our people safe. That’s not how we’re going to get past this recession. We’re going to have to do more than that.
And that’s why, when Congress gets back from recess, I will urge them to immediately take some steps -- bipartisan, common-sense steps -- that will make a difference; that will create a climate where businesses can hire, where folks have more money in their pockets to spend, where people who are out of work can find good jobs.
We need to begin by extending tax cuts for middle-class families so that you have more money in your paychecks next year. If you’ve got more money in your paycheck, you’re more likely to spend it. And that means small businesses and medium-sized businesses and large businesses will all have more customers. That means they’ll be in a better position to hire.
And while we’re at it, we need to make sure that millions of workers who are still pounding the pavement looking for jobs to support their families are not denied needed unemployment benefits.
Through patent reform, we can cut the red tape that stops too many inventors and entrepreneurs from quickly turning new ideas into thriving businesses -- which holds our whole economy back. And I want Congress to pass a set of trade deals -- deals we’ve already negotiated -- that would help displaced workers looking for new jobs and would allow our businesses to sell more products in countries in Asia and South America, products that are stamped with the words “Made in America.”
We also need to give more opportunities to all those construction workers out there who lost their jobs when the housing boom went bust. We could put them to work right now, by giving loans to private companies that want to repair our roads and our bridges and our airports, rebuilding our infrastructure. We have workers who need jobs and a country that needs rebuilding; an infrastructure bank would help us put them together.
And while we’re on the topic of infrastructure, there’s another stalemate in Congress right now involving our aviation industry which has stalled airport construction projects all around the country and put the jobs of tens of thousands of construction workers and others at risk -– because of politics. It’s another Washington-inflicted wound on America, and Congress needs to break that impasse now –- hopefully before the Senate adjourns -– so these folks can get back to work.
So these are some things that we could be doing right now. There’s no reason for Congress not to send me those bills so I can sign them into law right away as soon as they get back from recess. Both parties share power in Washington, and both parties need to take responsibility for improving this economy. It’s not a Democratic responsibility or a Republican responsibility; it is our collective responsibility as Americans. And I’ll be discussing additional ideas in the weeks ahead to help companies hire, invest and expand.
So, we’ve seen in the past few days that Washington has the ability to focus when there’s a timer ticking down, and when there’s a looming disaster. It shouldn’t take the risk of default -– the risk of economic catastrophe -– to get folks in this town to work together and do their jobs. Because there’s already a quiet crisis going on in the lives of a lot of families, in a lot of communities, all across the country. They’re looking for work, and they have been for a while; or they’re making do with fewer hours or fewer customers; or they’re just trying to make ends meet. That ought to compel Washington to cooperate. That ought to compel Washington to compromise, and it ought to compel Washington to act. That ought to be enough to get all of us in this town to do the jobs we were sent here to do. We’ve got to do everything in our power to grow this economy and put America back to work. That’s what I intend to do, and I’m looking forward to working with Congress to make it happen.
Thanks very much, everybody.
Mostrando entradas con la etiqueta DEBT CEILING. Mostrar todas las entradas
Mostrando entradas con la etiqueta DEBT CEILING. Mostrar todas las entradas
martes, 2 de agosto de 2011
domingo, 31 de julio de 2011
President announces Debt-Limit Deal
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release
July 31, 2011
REMARKS BY THE PRESIDENT
James S. Brady Press Briefing Room
8:40 P.M. EDT
THE PRESIDENT: Good evening. There are still some very important votes to be taken by members of Congress, but I want to announce that the leaders of both parties, in both chambers, have reached an agreement that will reduce the deficit and avoid default -- a default that would have had a devastating effect on our economy.
The first part of this agreement will cut about $1 trillion in spending over the next 10 years -- cuts that both parties had agreed to early on in this process. The result would be the lowest level of annual domestic spending since Dwight Eisenhower was President -- but at a level that still allows us to make job-creating investments in things like education and research. We also made sure that these cuts wouldn’t happen so abruptly that they’d be a drag on a fragile economy.
Now, I've said from the beginning that the ultimate solution to our deficit problem must be balanced. Despite what some Republicans have argued, I believe that we have to ask the wealthiest Americans and biggest corporations to pay their fair share by giving up tax breaks and special deductions. Despite what some in my own party have argued, I believe that we need to make some modest adjustments to programs like Medicare to ensure that they’re still around for future generations.
That's why the second part of this agreement is so important. It establishes a bipartisan committee of Congress to report back by November with a proposal to further reduce the deficit, which will then be put before the entire Congress for an up or down vote. In this stage, everything will be on the table. To hold us all accountable for making these reforms, tough cuts that both parties would find objectionable would automatically go into effect if we don’t act. And over the next few months, I’ll continue to make a detailed case to these lawmakers about why I believe a balanced approach is necessary to finish the job.
Now, is this the deal I would have preferred? No. I believe that we could have made the tough choices required -- on entitlement reform and tax reform -- right now, rather than through a special congressional committee process. But this compromise does make a serious down payment on the deficit reduction we need, and gives each party a strong incentive to get a balanced plan done before the end of the year.
Most importantly, it will allow us to avoid default and end the crisis that Washington imposed on the rest of America. It ensures also that we will not face this same kind of crisis again in six months, or eight months, or 12 months. And it will begin to lift the cloud of debt and the cloud of uncertainty that hangs over our economy.
Now, this process has been messy; it’s taken far too long. I've been concerned about the impact that it has had on business confidence and consumer confidence and the economy as a whole over the last month. Nevertheless, ultimately, the leaders of both parties have found their way toward compromise. And I want to thank them for that.
Most of all, I want to thank the American people. It’s been your voices -- your letters, your emails, your tweets, your phone calls -- that have compelled Washington to act in the final days. And the American people's voice is a very, very powerful thing.
We’re not done yet. I want to urge members of both parties to do the right thing and support this deal with your votes over the next few days. It will allow us to avoid default. It will allow us to pay our bills. It will allow us to start reducing our deficit in a responsible way. And it will allow us to turn to the very important business of doing everything we can to create jobs, boost wages, and grow this economy faster than it's currently growing.
That’s what the American people sent us here to do, and that’s what we should be devoting all of our time to accomplishing in the months ahead.
Thank you very much, everybody.
END 8:44 P.M. EDT
Office of the Press Secretary
For Immediate Release
July 31, 2011
REMARKS BY THE PRESIDENT
James S. Brady Press Briefing Room
8:40 P.M. EDT
THE PRESIDENT: Good evening. There are still some very important votes to be taken by members of Congress, but I want to announce that the leaders of both parties, in both chambers, have reached an agreement that will reduce the deficit and avoid default -- a default that would have had a devastating effect on our economy.
The first part of this agreement will cut about $1 trillion in spending over the next 10 years -- cuts that both parties had agreed to early on in this process. The result would be the lowest level of annual domestic spending since Dwight Eisenhower was President -- but at a level that still allows us to make job-creating investments in things like education and research. We also made sure that these cuts wouldn’t happen so abruptly that they’d be a drag on a fragile economy.
Now, I've said from the beginning that the ultimate solution to our deficit problem must be balanced. Despite what some Republicans have argued, I believe that we have to ask the wealthiest Americans and biggest corporations to pay their fair share by giving up tax breaks and special deductions. Despite what some in my own party have argued, I believe that we need to make some modest adjustments to programs like Medicare to ensure that they’re still around for future generations.
That's why the second part of this agreement is so important. It establishes a bipartisan committee of Congress to report back by November with a proposal to further reduce the deficit, which will then be put before the entire Congress for an up or down vote. In this stage, everything will be on the table. To hold us all accountable for making these reforms, tough cuts that both parties would find objectionable would automatically go into effect if we don’t act. And over the next few months, I’ll continue to make a detailed case to these lawmakers about why I believe a balanced approach is necessary to finish the job.
Now, is this the deal I would have preferred? No. I believe that we could have made the tough choices required -- on entitlement reform and tax reform -- right now, rather than through a special congressional committee process. But this compromise does make a serious down payment on the deficit reduction we need, and gives each party a strong incentive to get a balanced plan done before the end of the year.
Most importantly, it will allow us to avoid default and end the crisis that Washington imposed on the rest of America. It ensures also that we will not face this same kind of crisis again in six months, or eight months, or 12 months. And it will begin to lift the cloud of debt and the cloud of uncertainty that hangs over our economy.
Now, this process has been messy; it’s taken far too long. I've been concerned about the impact that it has had on business confidence and consumer confidence and the economy as a whole over the last month. Nevertheless, ultimately, the leaders of both parties have found their way toward compromise. And I want to thank them for that.
Most of all, I want to thank the American people. It’s been your voices -- your letters, your emails, your tweets, your phone calls -- that have compelled Washington to act in the final days. And the American people's voice is a very, very powerful thing.
We’re not done yet. I want to urge members of both parties to do the right thing and support this deal with your votes over the next few days. It will allow us to avoid default. It will allow us to pay our bills. It will allow us to start reducing our deficit in a responsible way. And it will allow us to turn to the very important business of doing everything we can to create jobs, boost wages, and grow this economy faster than it's currently growing.
That’s what the American people sent us here to do, and that’s what we should be devoting all of our time to accomplishing in the months ahead.
Thank you very much, everybody.
END 8:44 P.M. EDT
jueves, 28 de julio de 2011
Intransigence of the Senate Democrats
Diego Sanchez Gallardo
PRSSA National Treasurer
Has anyone seen/heard these questions asked of any Democrat during the debt limit kerfuffle?
1. “Explain your vote against raising the debt ceiling in 2006.”
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| Gallardo (left) |
2. “Explain why the unanimous Democrat Senate vote against raising the debt ceiling in 2006 did not constitute a crisis, as you have repeatedly declared this issue to be.”
3. “Explain why tax-and-spend leftist Obama’s florid rhetoric against raising the debt ceiling in 2006 earned him the Presidency, but conservative House members who ran on fiscal reform and now oppose borrowing more money are ‘acting like children’”.
4. “Explain why you Democrats are on television declaring that it is ‘extreme’ to oppose raising the debt ceiling and that the only reasonable and responsible solution is for House Republicans to negotiate with Democrat Senators and abandon certain positions ‘because this issue is so important’, but you yourself voted to pass socialized healthcare on a straight party-line vote with the entire GOP shut out of the development of the legislation and even prevented from seeing the bill before the vote.”
Of course not, everyone is too busy demonizing the Tea Party and the freshmen Republicans in the House. They’re accused of being purists. What does that mean? They stick to principles unlike the Democrats and the GOP Leadership? The Democrats, who failed to produce a bill in 800 days until last week, are now touting themselves as the warriors of fiscal responsibility. The problem is both Reid’s and Boehner’s plans are a joke for the American people. Reid’s plan supposedly reduces the debt by 1.1 trillion dollars by scaling back military operations in both Iraq and Afghanistan. Nobody in the media mentions, however, that those savings were already slated to occur even if this budget plan hadn’t existed. And to add more dissatisfaction to the bill the irresponsible Senate Democrats are rallying behind, this plan doesn’t even touch entitlements. The unsustainable Medicare and Social Security are ignored completely.
The Speaker’s plan isn’t any better. The Boehner plan merely plans to cut a $100 billion in a span of a decade, meaning a total of $1 billion in cuts per year. To say that’s a dent to the national debt is an insult to dents. At the tune this federal government is spending, we owe $100 billion per month in just interest payments.
This unserious approach to cut spending met fierce opposition from members of the Republican Study Committee and grassroots across the country. The CBO even estimated that the cuts would be lower than expected. Boehner then proceeded to amend the plan by establishing a committee to decide $1.1 trillion in cuts the next ten years. A committee comprised by 12 members, 6 elected by the Democrats and 6 elected by Republicans. But as Sen. Reid said, “this plan is dead on arrival on the Senate.” And with House GOP surely to rally to block Reid’s plan we are left with no serious approach. “Cut, Cap, and Balance” passed the House with even some Democrats voting for it, only to be stopped in the Senate without any debate. And the President has been sitting on the sidelines most of the debate, only attacking corporate jets and the wealthy. Give me a break.
And so that’s how this story ends. With the party of endless spending and entitlements unto death lecturing fiscal conservatives on how they’re leading the country into a credit downgrade. Yesterday all 53 Senate Dems signed a letter to Boehner essentially saying: your bill will never pass. If this is how Washington will behave, default is imminent.
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The author is the newly elected National Treasurer for the Puerto Rico Statehood Students Association. Gallardo is a student in American University and works for Popular Inc.
Economic Impact of a U.S. Default
By Julio A. Cabral Corrada
Cornell '13 - PRSSA
"Pathetic”. This is the word James Gorman, CEO of Morgan Stanley, used yesterday during his remarks at a firmwide forum to describe the lack of common sense in Washington. As one of the World’s best financial minds, Mr. Gorman questioned with disappointment the capacity of our “leaders” to truly understand the economic consequences of their inability to compromise. Following the conference meeting, I went straight to my desk in the trading floor.
As I watched in my Bloomberg Terminal all the World markets (which are the engine and best indices of our economy) plummet, I acknowledged there were immediate consequences far more pivotal than a default, tax issues, and election concerns (the three topics emphasized by the politicians and the media). Thus, I decided to challenge on the subject one of my bosses and mentor, Matt Berke, who happens to be a Cornell guy and the Global Head of Equity Risk Management. His response was simple: “You do it. Research, Analyze and Facts. It should be by 10:00 pm on the desk.”
Thus, after completing a full detailed report last night by 8:33pm, I thought I could share a brief abstract of my analysis, which delineates the economic impact a default on our debt could have on our financial system. As many of you have read, President Barack Obama’s administration, Democrats and Republicans in Congress have been locked in a standoff for months over what kind of deficit-cutting measures should be tied to an increase in the nation’s $14.3 trillion debt ceiling. Tim Geithner, Secretary of the Treasury, has said the U.S. exhausts its borrowing authority on August 2 (which is next Tuesday!) and risks going into default.
This senseless political wrangling may cost the U.S. its AAA rating, adding $100 billion a year to government costs while dragging down our economic growth. A U.S. credit-rating cut would likely raise the nation’s borrowing costs by increasing Treasury yields by 60 to 70 basis points over the medium term. "Standard & Poor’s, which has given the U.S. a solid ranking since 1941, reiterated exactly one week ago that the chance of a downgrade is 50 percent in the next three months and may happen as soon as August", mentioned the credit agency.
If this were to occur, it will have a critical impact on treasury rates. Those $100 billion a year I mentioned before are capital being used for higher interest rates, and that’s money being taken away from other goods and services of the nation. Also,Treasury yields indicate that investors are favoring bank or company debt over treasuries, raising concerns of the credibility of government debt.
The short-term effect on treasuries of a downgrade would be about 5 to 10 basis points, because few asset managers would be forced to sell these treasuries. "Yields on benchmark 10-year notes fell five basis points, or 0.05 percentage points, to 2.95 percent today. That compares with an average of 4.03 percent since 2001", according to a Morgan Stanley report. The TED spread, the difference between what lenders and the U.S. government pay to borrow for three months, narrowed to 18.7 basis points yesterday, the least since March.
Therefore, as we make borrowing more expensive we are diverting tax dollars to interest payments. In other words, there is less money out there! Since it is more expensive to borrow money, then our economy does not grow (that is why the Federal Reserve has kept interest so low since the financial crisis using quantitative easing—so people can cheaply borrow money and spend more, ultimately stimulating our economy). THEN, if interest rates pick up too much then everyone will suffer. From the homeowner with a mortgage to the student with a college loan, interest rates will rise for everyone. This will hurt the pocket of all families!
Furthermore, and to top it off, I should state that the U.S. unemployment rate rose for a third straight month in June to 9.2 percent, pointing to an economy lacking momentum entering the second half of the year. Employers added 18,000 workers to payrolls, the fewest in nine months.
This is the picture which politicians, the media, and many across America are missing. I hope this helps clarify some doubts about the impact a default will have on our economy. Hopefully, in a near future we will have more intellectually prepared public servers that can make responsible legislation and public policy. This nation needs people with a common sense, not those who want to play partisan politics. The people deserve better. Tomorrow (Thursday) will shall see if a bill is passed.
Have a good one!
lunes, 25 de julio de 2011
Remarks of President Barack Obama/ Debt Speech
Monday, July 25, 2011
Washington, DC
Good evening. Tonight, I want to talk about the debate we’ve been having in Washington over the national debt – a debate that directly affects the lives of every single American.
For the last decade, we have spent more money than we take in. In the year 2000, the government had a budget surplus. But instead of using it to pay off our debt, the money was spent on trillions of dollars in new tax cuts, while two wars and an expensive prescription drug program were simply added to our nation’s credit card.
As a result, the deficit was on track to top $1 trillion the year I took office. To make matters worse, the recession meant that there was less money coming in, and it required us to spend even more – on tax cuts for middle-class families; on unemployment insurance; on aid to states so we could prevent more teachers and firefighters and police officers from being laid off. These emergency steps also added to the deficit.
Now, every family knows that a little credit card debt is manageable. But if we stay on the current path, our growing debt could cost us jobs and do serious damage to the economy. More of our tax dollars will go toward paying off the interest on our loans. Businesses will be less likely to open up shop and hire workers in a country that can’t balance its books. Interest rates could climb for everyone who borrows money – the homeowner with a mortgage, the student with a college loan, the corner store that wants to expand. And we won’t have enough money to make job-creating investments in things like education and infrastructure, or pay for vital programs like Medicare and Medicaid.
Because neither party is blameless for the decisions that led to this problem, both parties have a responsibility to solve it. And over the last several months, that’s what we’ve been trying to do. I won’t bore you with the details of every plan or proposal, but basically, the debate has centered around two different approaches.
The first approach says, let’s live within our means by making serious, historic cuts in government spending. Let’s cut domestic spending to the lowest level it’s been since Dwight Eisenhower was President. Let’s cut defense spending at the Pentagon by hundreds of billions of dollars. Let’s cut out the waste and fraud in health care programs like Medicare – and at the same time, let’s make modest adjustments so that Medicare is still there for future generations. Finally, let’s ask the wealthiest Americans and biggest corporations to give up some of their tax breaks and special deductions.
This balanced approach asks everyone to give a little without requiring anyone to sacrifice too much. It would reduce the deficit by around $4 trillion and put us on a path to pay down our debt. And the cuts wouldn’t happen so abruptly that they’d be a drag on our economy, or prevent us from helping small business and middle-class families get back on their feet right now.
This approach is also bipartisan. While many in my own party aren’t happy with the painful cuts it makes, enough will be willing to accept them if the burden is fairly shared. While Republicans might like to see deeper cuts and no revenue at all, there are many in the Senate who have said “Yes, I’m willing to put politics aside and consider this approach because I care about solving the problem.” And to his credit, this is the kind of approach the Republican Speaker of the House, John Boehner, was working on with me over the last several weeks.
The only reason this balanced approach isn’t on its way to becoming law right now is because a significant number of Republicans in Congress are insisting on a cuts-only approach – an approach that doesn’t ask the wealthiest Americans or biggest corporations to contribute anything at all. And because nothing is asked of those at the top of the income scales, such an approach would close the deficit only with more severe cuts to programs we all care about – cuts that place a greater burden on working families.
So the debate right now isn’t about whether we need to make tough choices. Democrats and Republicans agree on the amount of deficit reduction we need. The debate is about how it should be done. Most Americans, regardless of political party, don’t understand how we can ask a senior citizen to pay more for her Medicare before we ask corporate jet owners and oil companies to give up tax breaks that other companies don’t get. How can we ask a student to pay more for college before we ask hedge fund managers to stop paying taxes at a lower rate than their secretaries? How can we slash funding for education and clean energy before we ask people like me to give up tax breaks we don’t need and didn’t ask for?
That’s not right. It’s not fair. We all want a government that lives within its means, but there are still things we need to pay for as a country – things like new roads and bridges; weather satellites and food inspection; services to veterans and medical research.
Keep in mind that under a balanced approach, the 98% of Americans who make under $250,000 would see no tax increases at all. None. In fact, I want to extend the payroll tax cut for working families. What we’re talking about under a balanced approach is asking Americans whose incomes have gone up the most over the last decade – millionaires and billionaires – to share in the sacrifice everyone else has to make. And I think these patriotic Americans are willing to pitch in. In fact, over the last few decades, they’ve pitched in every time we passed a bipartisan deal to reduce the deficit. The first time a deal passed, a predecessor of mine made the case for a balanced approach by saying this:
“Would you rather reduce deficits and interest rates by raising revenue from those who are not now paying their fair share, or would you rather accept larger budget deficits, higher interest rates, and higher unemployment? And I think I know your answer.”
Those words were spoken by Ronald Reagan. But today, many Republicans in the House refuse to consider this kind of balanced approach – an approach that was pursued not only by President Reagan, but by the first President Bush, President Clinton, myself, and many Democrats and Republicans in the United States Senate. So we are left with a stalemate.
Now, what makes today’s stalemate so dangerous is that it has been tied to something known as the debt ceiling – a term that most people outside of Washington have probably never heard of before.
Understand – raising the debt ceiling does not allow Congress to spend more money. It simply gives our country the ability to pay the bills that Congress has already racked up. In the past, raising the debt ceiling was routine. Since the 1950s, Congress has always passed it, and every President has signed it. President Reagan did it 18 times. George W. Bush did it 7 times. And we have to do it by next Tuesday, August 2nd, or else we won’t be able to pay all of our bills.
Unfortunately, for the past several weeks, Republican House members have essentially said that the only way they’ll vote to prevent America’s first-ever default is if the rest of us agree to their deep, spending cuts-only approach.
If that happens, and we default, we would not have enough money to pay all of our bills – bills that include monthly Social Security checks, veterans’ benefits, and the government contracts we’ve signed with thousands of businesses.
For the first time in history, our country’s Triple A credit rating would be downgraded, leaving investors around the world to wonder whether the United States is still a good bet. Interest rates would skyrocket on credit cards, and mortgages, car loans, which amounts to a huge tax hike on the American people. We would risk sparking a deep economic crisis – one caused almost entirely by Washington.
Defaulting on our obligations is a reckless and irresponsible outcome to this debate. And Republican leaders say that they agree we must avoid default. But the new approach that Speaker Boehner unveiled today, which would temporarily extend the debt ceiling in exchange for spending cuts, would force us to once again face the threat of default just six months from now. In other words, it doesn’t solve the problem.
First of all, a six-month extension of the debt ceiling might not be enough to avoid a credit downgrade and the higher interest rates that all Americans would have to pay as a result. We know what we have to do to reduce our deficits; there’s no point in putting the economy at risk by kicking the can further down the road.
But there’s an even greater danger to this approach. Based on what we’ve seen these past few weeks, we know what to expect six months from now. The House will once again refuse to prevent default unless the rest of us accept their cuts-only approach. Again, they will refuse to ask the wealthiest Americans to give up their tax cuts or deductions. Again, they will demand harsh cuts to programs like Medicare. And once again, the economy will be held captive unless they get their way.
That is no way to run the greatest country on Earth. It is a dangerous game we’ve never played before, and we can’t afford to play it now. Not when the jobs and livelihoods of so many families are at stake. We can’t allow the American people to become collateral damage to Washington’s political warfare.
Congress now has one week left to act, and there are still paths forward. The Senate has introduced a plan to avoid default, which makes a down payment on deficit reduction and ensures that we don’t have to go through this again in six months.
I think that’s a much better path, although serious deficit reduction would still require us to tackle the tough challenges of entitlement and tax reform. Either way, I have told leaders of both parties that they must come up with a fair compromise in the next few days that can pass both houses of Congress – a compromise I can sign. And I am confident we can reach this compromise. Despite our disagreements, Republican leaders and I have found common ground before. And I believe that enough members of both parties will ultimately put politics aside and help us make progress.
I realize that a lot of the new members of Congress and I don’t see eye-to-eye on many issues. But we were each elected by some of the same Americans for some of the same reasons. Yes, many want government to start living within its means. And many are fed up with a system in which the deck seems stacked against middle-class Americans in favor of the wealthiest few. But do you know what people are fed up with most of all?
They’re fed up with a town where compromise has become a dirty word. They work all day long, many of them scraping by, just to put food on the table. And when these Americans come home at night, bone-tired, and turn on the news, all they see is the same partisan three-ring circus here in Washington. They see leaders who can’t seem to come together and do what it takes to make life just a little bit better for ordinary Americans. They are offended by that. And they should be.
The American people may have voted for divided government, but they didn’t vote for a dysfunctional government. So I’m asking you all to make your voice heard. If you want a balanced approach to reducing the deficit, let your Member of Congress know. If you believe we can solve this problem through compromise, send that message.
America, after all, has always been a grand experiment in compromise. As a democracy made up of every race and religion, where every belief and point of view is welcomed, we have put to the test time and again the proposition at the heart of our founding: that out of many, we are one. We have engaged in fierce and passionate debates about the issues of the day, but from slavery to war, from civil liberties to questions of economic justice, we have tried to live by the words that Jefferson once wrote: “Every man cannot have his way in all things…Without this mutual disposition, we are disjointed individuals, but not a society.”
History is scattered with the stories of those who held fast to rigid ideologies and refused to listen to those who disagreed. But those are not the Americans we remember. We remember the Americans who put country above self, and set personal grievances aside for the greater good. We remember the Americans who held this country together during its most difficult hours; who put aside pride and party to form a more perfect union.
That’s who we remember. That’s who we need to be right now. The entire world is watching. So let’s seize this moment to show why the United States of America is still the greatest nation on Earth – not just because we can still keep our word and meet our obligations, but because we can still come together as one nation. Thank you, God bless you, and may God bless the United States of America.
Washington, DC
Good evening. Tonight, I want to talk about the debate we’ve been having in Washington over the national debt – a debate that directly affects the lives of every single American.
For the last decade, we have spent more money than we take in. In the year 2000, the government had a budget surplus. But instead of using it to pay off our debt, the money was spent on trillions of dollars in new tax cuts, while two wars and an expensive prescription drug program were simply added to our nation’s credit card.
As a result, the deficit was on track to top $1 trillion the year I took office. To make matters worse, the recession meant that there was less money coming in, and it required us to spend even more – on tax cuts for middle-class families; on unemployment insurance; on aid to states so we could prevent more teachers and firefighters and police officers from being laid off. These emergency steps also added to the deficit.
Now, every family knows that a little credit card debt is manageable. But if we stay on the current path, our growing debt could cost us jobs and do serious damage to the economy. More of our tax dollars will go toward paying off the interest on our loans. Businesses will be less likely to open up shop and hire workers in a country that can’t balance its books. Interest rates could climb for everyone who borrows money – the homeowner with a mortgage, the student with a college loan, the corner store that wants to expand. And we won’t have enough money to make job-creating investments in things like education and infrastructure, or pay for vital programs like Medicare and Medicaid.
Because neither party is blameless for the decisions that led to this problem, both parties have a responsibility to solve it. And over the last several months, that’s what we’ve been trying to do. I won’t bore you with the details of every plan or proposal, but basically, the debate has centered around two different approaches.
The first approach says, let’s live within our means by making serious, historic cuts in government spending. Let’s cut domestic spending to the lowest level it’s been since Dwight Eisenhower was President. Let’s cut defense spending at the Pentagon by hundreds of billions of dollars. Let’s cut out the waste and fraud in health care programs like Medicare – and at the same time, let’s make modest adjustments so that Medicare is still there for future generations. Finally, let’s ask the wealthiest Americans and biggest corporations to give up some of their tax breaks and special deductions.
This balanced approach asks everyone to give a little without requiring anyone to sacrifice too much. It would reduce the deficit by around $4 trillion and put us on a path to pay down our debt. And the cuts wouldn’t happen so abruptly that they’d be a drag on our economy, or prevent us from helping small business and middle-class families get back on their feet right now.
This approach is also bipartisan. While many in my own party aren’t happy with the painful cuts it makes, enough will be willing to accept them if the burden is fairly shared. While Republicans might like to see deeper cuts and no revenue at all, there are many in the Senate who have said “Yes, I’m willing to put politics aside and consider this approach because I care about solving the problem.” And to his credit, this is the kind of approach the Republican Speaker of the House, John Boehner, was working on with me over the last several weeks.
The only reason this balanced approach isn’t on its way to becoming law right now is because a significant number of Republicans in Congress are insisting on a cuts-only approach – an approach that doesn’t ask the wealthiest Americans or biggest corporations to contribute anything at all. And because nothing is asked of those at the top of the income scales, such an approach would close the deficit only with more severe cuts to programs we all care about – cuts that place a greater burden on working families.
So the debate right now isn’t about whether we need to make tough choices. Democrats and Republicans agree on the amount of deficit reduction we need. The debate is about how it should be done. Most Americans, regardless of political party, don’t understand how we can ask a senior citizen to pay more for her Medicare before we ask corporate jet owners and oil companies to give up tax breaks that other companies don’t get. How can we ask a student to pay more for college before we ask hedge fund managers to stop paying taxes at a lower rate than their secretaries? How can we slash funding for education and clean energy before we ask people like me to give up tax breaks we don’t need and didn’t ask for?
That’s not right. It’s not fair. We all want a government that lives within its means, but there are still things we need to pay for as a country – things like new roads and bridges; weather satellites and food inspection; services to veterans and medical research.
Keep in mind that under a balanced approach, the 98% of Americans who make under $250,000 would see no tax increases at all. None. In fact, I want to extend the payroll tax cut for working families. What we’re talking about under a balanced approach is asking Americans whose incomes have gone up the most over the last decade – millionaires and billionaires – to share in the sacrifice everyone else has to make. And I think these patriotic Americans are willing to pitch in. In fact, over the last few decades, they’ve pitched in every time we passed a bipartisan deal to reduce the deficit. The first time a deal passed, a predecessor of mine made the case for a balanced approach by saying this:
“Would you rather reduce deficits and interest rates by raising revenue from those who are not now paying their fair share, or would you rather accept larger budget deficits, higher interest rates, and higher unemployment? And I think I know your answer.”
Those words were spoken by Ronald Reagan. But today, many Republicans in the House refuse to consider this kind of balanced approach – an approach that was pursued not only by President Reagan, but by the first President Bush, President Clinton, myself, and many Democrats and Republicans in the United States Senate. So we are left with a stalemate.
Now, what makes today’s stalemate so dangerous is that it has been tied to something known as the debt ceiling – a term that most people outside of Washington have probably never heard of before.
Understand – raising the debt ceiling does not allow Congress to spend more money. It simply gives our country the ability to pay the bills that Congress has already racked up. In the past, raising the debt ceiling was routine. Since the 1950s, Congress has always passed it, and every President has signed it. President Reagan did it 18 times. George W. Bush did it 7 times. And we have to do it by next Tuesday, August 2nd, or else we won’t be able to pay all of our bills.
Unfortunately, for the past several weeks, Republican House members have essentially said that the only way they’ll vote to prevent America’s first-ever default is if the rest of us agree to their deep, spending cuts-only approach.
If that happens, and we default, we would not have enough money to pay all of our bills – bills that include monthly Social Security checks, veterans’ benefits, and the government contracts we’ve signed with thousands of businesses.
For the first time in history, our country’s Triple A credit rating would be downgraded, leaving investors around the world to wonder whether the United States is still a good bet. Interest rates would skyrocket on credit cards, and mortgages, car loans, which amounts to a huge tax hike on the American people. We would risk sparking a deep economic crisis – one caused almost entirely by Washington.
Defaulting on our obligations is a reckless and irresponsible outcome to this debate. And Republican leaders say that they agree we must avoid default. But the new approach that Speaker Boehner unveiled today, which would temporarily extend the debt ceiling in exchange for spending cuts, would force us to once again face the threat of default just six months from now. In other words, it doesn’t solve the problem.
First of all, a six-month extension of the debt ceiling might not be enough to avoid a credit downgrade and the higher interest rates that all Americans would have to pay as a result. We know what we have to do to reduce our deficits; there’s no point in putting the economy at risk by kicking the can further down the road.
But there’s an even greater danger to this approach. Based on what we’ve seen these past few weeks, we know what to expect six months from now. The House will once again refuse to prevent default unless the rest of us accept their cuts-only approach. Again, they will refuse to ask the wealthiest Americans to give up their tax cuts or deductions. Again, they will demand harsh cuts to programs like Medicare. And once again, the economy will be held captive unless they get their way.
That is no way to run the greatest country on Earth. It is a dangerous game we’ve never played before, and we can’t afford to play it now. Not when the jobs and livelihoods of so many families are at stake. We can’t allow the American people to become collateral damage to Washington’s political warfare.
Congress now has one week left to act, and there are still paths forward. The Senate has introduced a plan to avoid default, which makes a down payment on deficit reduction and ensures that we don’t have to go through this again in six months.
I think that’s a much better path, although serious deficit reduction would still require us to tackle the tough challenges of entitlement and tax reform. Either way, I have told leaders of both parties that they must come up with a fair compromise in the next few days that can pass both houses of Congress – a compromise I can sign. And I am confident we can reach this compromise. Despite our disagreements, Republican leaders and I have found common ground before. And I believe that enough members of both parties will ultimately put politics aside and help us make progress.
I realize that a lot of the new members of Congress and I don’t see eye-to-eye on many issues. But we were each elected by some of the same Americans for some of the same reasons. Yes, many want government to start living within its means. And many are fed up with a system in which the deck seems stacked against middle-class Americans in favor of the wealthiest few. But do you know what people are fed up with most of all?
They’re fed up with a town where compromise has become a dirty word. They work all day long, many of them scraping by, just to put food on the table. And when these Americans come home at night, bone-tired, and turn on the news, all they see is the same partisan three-ring circus here in Washington. They see leaders who can’t seem to come together and do what it takes to make life just a little bit better for ordinary Americans. They are offended by that. And they should be.
The American people may have voted for divided government, but they didn’t vote for a dysfunctional government. So I’m asking you all to make your voice heard. If you want a balanced approach to reducing the deficit, let your Member of Congress know. If you believe we can solve this problem through compromise, send that message.
America, after all, has always been a grand experiment in compromise. As a democracy made up of every race and religion, where every belief and point of view is welcomed, we have put to the test time and again the proposition at the heart of our founding: that out of many, we are one. We have engaged in fierce and passionate debates about the issues of the day, but from slavery to war, from civil liberties to questions of economic justice, we have tried to live by the words that Jefferson once wrote: “Every man cannot have his way in all things…Without this mutual disposition, we are disjointed individuals, but not a society.”
History is scattered with the stories of those who held fast to rigid ideologies and refused to listen to those who disagreed. But those are not the Americans we remember. We remember the Americans who put country above self, and set personal grievances aside for the greater good. We remember the Americans who held this country together during its most difficult hours; who put aside pride and party to form a more perfect union.
That’s who we remember. That’s who we need to be right now. The entire world is watching. So let’s seize this moment to show why the United States of America is still the greatest nation on Earth – not just because we can still keep our word and meet our obligations, but because we can still come together as one nation. Thank you, God bless you, and may God bless the United States of America.
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