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Obama: Chance for 'something big' to calm economy

WASHINGTON (AP) - President Barack Obama said Friday Congress has a "unique opportunity to do something big" and stabilize the U.S. economy for decades by cutting deficits at the same time it raises the national debt limit ahead of a critical Aug. 2 deadline.
He said he was ready to make tough decisions - such as on Medicare
costs - and challenged Republicans to do the same.
He attempted to turn the Republicans' opposition to any tax
increases back against them, warning starkly that failure to raise
the debt ceiling would mean "effectively a tax increase for
everybody" if the government defaults, sending up interest rates.
Still, Obama said that "it's hard to do a big package" in
deadlocked Washington, acknowledging Republicans are opposed to any new tax revenue as part of a deficit-cutting deal.
"If they show me a serious plan I'm ready to move," he said.
The president spoke at the White House Friday after five days
straight of meetings with congressional leaders failed to yield
compromise, and amid increasingly urgent warnings from credit
agencies and the financial sector about the risks of failing to
raise the government's borrowing limit.
Administration officials and private economists say that if the
U.S. fails to raise its borrowing limit and begins to stop paying
its bills as a result, the fragile U.S. economy could be cast into
a crisis that would reverberate around the globe. Democratic and
Republican congressional leaders agree on the need to avert that
outcome, but that hasn't been enough to get Republicans to agree to
the tax hikes on corporations and the wealthy sought by Obama - or
to convince Obama and Democrats to sign onto the steep entitlement
cuts without new revenue that Republicans favor.
The president spoke at his third news conference in two weeks on
an issue that is increasingly consuming Washington and his
The president said he was ready to make tough decisions such as
restructuring Medicare so that very wealthy recipients would have
to pay slightly more. He said he had stressed to Republicans that
anything they looked at should not affect current beneficiaries,
and he said providers such as drug companies could be targeted for
On Capitol Hill, meanwhile, Democrats and Republicans in the
House emerged from closed-door meetings to reiterate their hardened
stances. Republicans announced plans to call a vote next week on a
balanced budget constitutional amendment that would force the
government to balance its books.
Obama dismissed the idea, saying, "We don't need a
constitutional amendment to do that. What we need to do is do our
Failure to reach compromise has focused attention on a fallback
plan under discussion by Senate Republican leader Mitch McConnell
and Senate Majority Leader Harry Reid. That plan would give Obama
greater authority to raise the debt ceiling while setting
procedures in motion that could lead to federal spending cuts.
Obama insisted the public was on his side in wanting a
"balanced approach" that would mix spending cuts and the tax
increases opposed by Republicans.
"The American people are sold," he said. "The problem is that
members of Congress are dug in ideologically."
He renewed his pitch for a major package of some $4 trillion,
about three-quarters of which would be spending cuts along with
about $1 trillion in new revenue.
"We have a chance to stabilize America's finances for a decade
or 15 years or 20 years if we're willing to seize the moment," the
president said, adding later that everyone must be "willing to
"We don't need more studies, we don't need a balanced budget
amendment," Obama said. He said lawmakers simply needed to be able to make tough decisions and stand up to their political bases.

(Copyright 2011 by The Associated Press. All Rights Reserved.)

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