Obama and Congress headed collision course of government debt
WASHINGTON (CNN) — President Barack Obama positioned himself as a president fighting against income inequality, while accusing some Republicans of wanting to “accelerate” a trend that shows the wealthiest Americans reaping most of the benefits in the slow-growing economy.
“You’ve got a portion of Congress whose policies don’t just want to, you know, leave things alone, they actually want to accelerate these trends,” Obama said in an interview aired Sunday on ABC’s “This Week with George Stephanopoulos.” The interview was recorded on Friday.
The president was responding to a question about a recent University of California, Berkeley, study that found 95% of income gains from 2009 to 2012 went to the top 1% of earners. In short, the study found, the slow economic growth the United States has experienced since the economic crash of 2008 has primarily favored top earners, while incomes for the vast majority of people have stagnated.
Obama made the case that Republicans’ congressional agenda would further widen the income gap.
“There’s no serious economist out there that would suggest that, if you took the Republican agenda of slashing education further, slashing Medicare further, slashing research and development further, slashing investments in infrastructure further, that that would reverse some of these trends of inequality,” Obama said.
While Obama put a great deal of the blame on Republicans during the interview, he also acknowledged that “the president can stop” income inequality.
The debate over the income gap comes just weeks before the U.S. could surpass its debt limit.
According to the Bipartisan Policy Center, the country could run about $106 billion short of money it owes as early as October 18. If Congress fails to raise the nation’s borrowing limit, the government will be unable to pay the equivalent of a third of all the bills due during that period.
Obama told ABC that if negotiating over the debt ceiling — something he said he wouldn’t do — became the norm, the change would alter the relationship between the executive and legislative branches.
“What I haven’t been willing to negotiate, and I will not negotiate, is on the debt ceiling,” Obama said. “If we continue to set a precedent in which a president … is in a situation in which, each time the United States is called upon to pay its bills, the other party can simply sit there and say, ‘Well, we’re not going to … pay the bills unless you give us … what we want’ – that changes the constitutional structure of this government entirely.”
The debt ceiling is currently set at $16.7 trillion, and while debate over the issue has been fiery and partisan, it has largely been drowned out by discussion of possible military action in Syria. Many Republican lawmakers have said they won’t vote to raise the limit until certain spending cuts are implemented. Democrats have pushed back against that notion.
If the government defaults on its debt in October, all payments issued by the Treasury Department could be in jeopardy, including IRS refunds, Social Security and veterans’ benefits, Medicare reimbursements for doctors and hospitals, bond interest owed investors, payments to contractors and paychecks for federal workers and military personnel.
If Congress fails to act in time, Treasury will have to make difficult – and legally questionable – decisions about who should get paid and who should be stiffed. It may decide to pay some bills in full and on time and not others.
By Dan Merica
CNN Money’s Jeanne Sahadi contributed to this report.