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Obama Warns Against Repeat of Debt Ceiling 'Debacle'

  • Kent Klein

President Barack Obama speaks in the Rose Garden at the White House, May 12, 2012.
White House officials say President Barack Obama has warned top lawmakers from both major political parties - the Democrats and Republicans - that a repeat of last year's standoff over increasing the legal U.S. borrowing limit is unacceptable. The president met Wednesday with congressional leaders at the White House.

Mr. Obama told Capitol Hill's top Democrats and Republicans that he will not tolerate another legislative battle over raising the national debt ceiling, according to White House Press Secretary Jay Carney.

"We are not going to recreate the debt ceiling debacle of last August," said Carney. "It is simply not acceptable to hold the American and global economy hostage to one party’s political ideology."

The speaker of the House of Representatives, Republican John Boehner, said Tuesday that he will not allow the debt ceiling to be raised without major steps to reduce government spending and reform the budget process.

"Now, we should not dread the debt limit," said Boehner. "[As a] matter of fact, I think we should welcome it. It is an action-forcing event in a town that has become infamous for inaction."

Congress passed legislation last August to increase the government's borrowing authority, only hours before a deadline that would have put the United States in default. Stock values tumbled, and a major financial rating agency downgraded the nation's credit rating for the first time.

This year, aides in both parties expect the debt ceiling debate to be delayed until after the November elections.

Before he met with lawmakers, President Obama spoke with several business owners at a sandwich shop here in Washington. He said Congress should give a 10 percent income tax credit to businesses that add new jobs or increase wages this year.

"This is an example of the kind of thing that Congress could be doing right now that would help sustain the momentum that you guys have already built for yourselves," said President Obama. "So we will see if Congress is willing to act. That is part of the reason why we want to bring all these folks here, is to tell them, 'Get to work!'"

Mr. Obama told reporters that the economy is recovering, but still has a long way to go. He said the recovery is being hampered by what he called "headwinds" - high unemployment, a difficult housing market and economic uncertainty in Europe.

The president said his economic plan, if adopted, would help overcome those obstacles.

"Let's go ahead and act to help build and sustain momentum for our economy," said Obama. "There will be more than enough time for us to campaign and politic. But let's make sure that we do not lose steam at a time when a lot of folks like these are feeling pretty optimistic and are ready to go."

The president's proposed tax breaks for small businesses are part of what Mr. Obama calls his "to-do list" for Congress. It also includes proposals to help homeowners refinance their mortgages at lower interest rates and to create an agency to employ military veterans.