Economy & Budget

Obama: No more debt ceiling

Obama: No more debt ceiling

Speaking Jan. 1 at the White House at 11:20 p.m., less than an hour after the House voted 257 to 167 to approve new tax hikes, President Barack Obama announced that he will assert the authority to raise the debt ceiling for spending approved by Congress.

“One last point I want to make,” said the president flanked by Vice-President Joseph R. Biden Jr., whose Capitol Hill summitry closed the deal on a “fiscal cliff” compromise. “I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills, they have already racked up through the laws they have passed.

This is a critical pivot for the president, who previously dismissed the idea floated among liberals that Section 4 of the 14th Amendment, one of the three amendments passed at the end of the Civil War, authorizes the executive to borrow the funds to make good federal debt payments.

It reads: The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned…

This is the second time the administration has wielded the debt ceiling as a hammer against the Republicans in Congress.

As official Washington bugged out of town for Christmas, Secretary of the Treasury Timothy F. Geithner sent a Dec. 23 letter, late in the afternoon, to all members of Congress alerting them that the current statutory debt ceiling of $16.394 trillion would be reached Dec. 31.

Although Geithner conceded in the text of the letter that the Treasury could keep the government running past the end of the year, the surprise letter signaled a new level of brinksmanship.

Obama framed his assumption of the authority to borrow funds, regardless of a statutory debt ceiling, in the context of the upcoming fight to raise it—a fight Sen. Lindsey O. Graham (R.-S.C.) called “Round 2” becuase the senator said Republicans had been beaten in the negotiations to avoid the “fiscal cliff” or “Round 1.”

The president was direct. Either Congress raises the debt ceiling or he will go ahead and borrow the money to pay the bills on his own in order to avoid damage to the U.S. and world economies.

“Let me repeat, you can’t not pay bills that we have already incurred,” he said.

“In Congress refuses to the United States government the ability to pay these bills on-time, the consequences for the entire global economy would be catastrophic—far worse than the impact of a fiscal cliff,” he said.

“People will remember back in 2011, the last time this course of action was threatened, our entire recovery was put at risk,” he said.

“We can’t go down that path again.”

Watch the video of President Barack Obama’s complete remarks:

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