WASHINGTON -- Pressing both political parties to give ground, President Barack Obama declared yesterday that he would reject any stopgap extension of the nation's borrowing limit, adding fresh urgency for Republicans and his fellow Democrats to resolve intense tax and spending disputes and head off economic calamity.
"If not now, when?" Obama said in a news conference just ahead of fresh negotiations with congressional leaders at the White House. That meeting lasted about 90 minutes and ended with no sign of progress.
Obama pledged daily bargaining sessions until they reach an agreement and refused to even entertain the idea of a backup plan should they fail and the government should default on Aug. 2. "We are going to get this done," Obama insisted.
Yet the path to an agreement remained hard to see. Even as Obama spoke, Republicans affirmed their opposition to the tax increases he sees as crucial along with spending cuts for reducing huge federal deficits and restraining the soaring national debt.
A potential deal -- a package of spending cuts and tax increases that could total $2 trillion or more over a decade -- is considered necessary for Congress to lift the nation's $14.3 trillion debt limit. Failure to lift that cap could cause the government to default on its bills and sink the economy -- and the world -- into deeper trouble.
Obama renewed his case yesterday for a package that would put a historic dent in the country's deficits by blending elements that are politically poisonous for both parties: tax hikes for the wealthy and big corporations opposed by Republicans and social service cuts that Democrats decry.
Speaking shortly before heading to the White House, House Speaker John Boehner (R-Ohio) stood firm in his opposition to including tax increases. "Do you need to raise taxes in order to get control of spending? I think the answer is no," he said.
How things could play out
WASHINGTON -- What happens if Congress doesn't raise the debt ceiling? Here's a guide to what the major players in the debate are saying about possible scenarios.
THE SKY WILL FALL
The Obama administration says failure to raise the $14.3 trillion debt limit would be an unprecedented event that would lead to default and economic catastrophe. U.S. borrowing authority will run out Aug. 2. Not raising it, the White Hosue says, would throw the government into default, threatening the fragile economic recovery here and worldwide.
PICKING AND CHOOSING
Some Republicans say the Treasury could pay the interest on its debt after borrowing authority expires, an idea dubbed "prioritization." The Bipartisan Policy Center has estimated that Treasury would have $172.4 billion to use in August to make payments. Under one scenario, the center said, Treasury could use all inflows for August to pay for just six big items: interest on existing debt, Medicare, Medicaid, Social Security, unemployment insurance and defense contracts. But would mean there'd be no money left over for whole federal departments or federal salaries or Pell grants for college students.
A CONSTITUTIONAL QUESTION
If all else fails, and the White House and congressional Republicans can't agree on a long-term deficit-cutting agreement in exchange for lifting the debt ceiling,Obama may have another option: invoking the 14th Amendment to allow the government to issue more debt.