WASHINGTON – President Obama said Wednesday that he would reject any Republican effort to tie a long-term budget deal to a vote to increase the debt ceiling, saying such a strategy would be a threat to the recovering economy.
“That is a bad strategy for America, it’s a bad strategy for your businesses, and it is not a game that I will play,” Obama told a group of business leaders gathered for a meeting of the Business Roundtable.
The president was reacting to reports that Republicans on the Hill are considering a new way out of their standoff with the president over a massive set of tax rates and spending cuts set to take effect in the new year. Under that strategy, Republicans would agree to let taxes on the top earners rise, as the president has demanded, but would kick talks about a larger deficit reduction package into the new year when Obama will need their votes to avoid a federal default on the debt. Republicans could then demand concessions on the federal budget in return for voting to raise the nation’s debt limit.
Republicans similarly used the debt-limit vote as leverage in deficit negotiations in 2011. Those talks failed to yield a long-term deal, but did lead to a credit agency downgrading the U.S. credit rating.
Obama on Wednesday hearkened back to that fight, widely regarded it as a low point for recent Washington dysfunction.
“Most of you were involved in discussions and watched the catastrophe that happened in August of 2011. Everybody here is concerned about uncertainty. There's no uncertainty like the prospect that the United States of America, the largest economy that holds the world’s reserve currency, potentially defaults on its debts,” Obama said. “We can't afford to go there again. And this isn’t just my opinion. It’s the opinion of most of the folks in this room.”
In his proposal to resolve the budget crisis, Obama has requested a change in how the debt limit is raised. He wants the limit to essentially rise automatically unless two-thirds of Congress votes against it.
Obama’s comments reflect his attempts to isolate Republicans in the fight over extending George W. Bush-era tax cuts and avoiding an across-the-board spending cut due to take effect Jan. 2. Obama’s meeting with the group was his second high-profile huddle with corporate executives, a group that largely supports Republicans but has complained that Washington tax battles have become a drag on the economy.
The president tried to reassure the well-heeled leaders that his proposal to allow tax rates to rise for top income brackets would reestablish “certainty” about the tax climate, without asking much of them.
Obama’s plan would mean his audience paid more taxes, he acknowledged, “but not in any way that’s going to affect your spending, your lifestyles or the economy in any significant way.”