President Obama called Republican talk of not raising the limit—of, in effect, not paying the country’s bills—“irresponsible” and “absurd.” He said the GOP will “not collect a ransom in return for crashing the economy.
“We are not a deadbeat nation,”
At issue is the congressionally established debt limit, which the country is set to reach shortly. Without additional borrowing, the government will not be able to pay all of its bills, raising the prospect of a default on national debt payments or Washington being forced to stop issuing Social Security checks, pay to troops overseas and other legally required outlays, according to Obama. Either option would likely send shock waves through the fragile global economy.
Raising the debt limit was mostly a matter of routine in Washington under presidents of both parties for decades. The opposition would make a big show of wringing its hands over the nation’s finances (as a senator in 2006, Obama called it “a sign of leadership failure"), and the majority would find a way to pass it.
“Our economy is growing and our businesses are creating new jobs, so we are poised for a good year if we make smart decisions and sound investments” and so long as Washington politics “don’t get in the way,”
Republicans broke sharply from that script in August 2011, when they demanded spending cuts equal to the amount that the limit would be raised. The ensuing standoff brought the nation to the brink of default and led to the first-ever downgrade of the country’s credit rating—but also to historic spending cuts, signed into law by Obama. Top Republican lawmakers have said publicly that this time they may be willing to partially shut down the government to secure more reductions.