President Barack Obama says a failure by the U.S. Congress to raise the nation’s debt limit could cause another world recession. The president says he is confident the limit will be increased.
Mr. Obama is warning of severe consequences if lawmakers do not agree to increase the amount of money the government can legally borrow. “It could really destabilize world financial markets, and you could potentially have a significant financial event like the one that we have just gone through, and could plunge the world economy back into recession,” he said.
In an interview Friday with The Associated Press, the president urged fast action to raise the debt ceiling from its current legal limit of almost $14.3 trillion. He said he believes it will be done.
“I am confident we are going to raise the debt limit. We always have. We will do it again. And one of the encouraging things in the meetings with both the Democratic and Republican congressional leaders is that they all agree that it needs to happen,” he said.
However, Mr. Obama acknowledged that he will have to compromise with the majority Republicans in the House of Representatives, and agree to reduce government spending.
The second-ranking House Republican, Eric Cantor, said Friday lawmakers in his party are insisting on spending reductions.
“We are united in cutting spending. We are uniting in promoting growth. And we are united in the fact that we do not believe that we should be raising taxes in this tough economy. All of these things, I think, set us apart from members in the caucus on the other side of the aisle,” he said.
The House Friday passed Representative Paul Ryan’s fiscal 2012 government budget proposal, which the president sharply criticized this week. No Democrats voted for the plan, and the Democratic-majority Senate is not likely to pass it.
Mr. Obama has been especially critical of the Ryan plan’s proposed extension a tax breaks for upper-income Americans and cuts in social programs.
Still, the president agrees with top Republicans that spending will need to be curtailed.
“We both want spending cuts. We both want to make sure that we are not wasting taxpayer dollars. There are some fundamental differences in overall approach,” he said.
In the interview, the president also said U.S. and NATO forces in Libya have prevented a wholesale slaughter, despite a military stalemate on the ground.
Mr. Obama said he does not see a need for the U.S. to again participate directly in enforcing the no-fly zone against Libyan leader Moammar Gadhafi’s forces.
He said Mr. Gadhafi is under increasing pressure to leave.