Obama warns GOP against short-term debt fix as Hill struggles to find fix

Washington, DC, United States (AHN) – President Barack Obama on Friday warned Republicans against any short-term proposals to raise the federal government’s limit on the money it can borrow.

Late Friday afternoon, the House narrowly approved, 219-210, a bill championed by Speaker John Boehner that would allow the government to borrow money for another six months before more legislation would be needed to raise the nation’s debt ceiling.

Senate Democratic leaders have already declared the bill DOA in that chamber.

A short-term increase over the current $14.3 trillion debt ceiling “does not solve the problem, and it has no chance of becoming law,” Obama said earlier in the day.

Unless they approve a debt ceiling increase by Tuesday, payments for Social Security and other programs will cease. Financial institutions are warning the stock market could fall by 30 percent, interest rates would rise and the nation would be plunged into another recession.

Throughout the day Friday, House Speaker John Boehner (R-OH) tried to convince congressmen to vote for his revamped bill that would require a vote on a balanced budget amendment within six months.

Obama did not respond directly to the new proposal but did say, “We agree on a process where the next step is a debate in the coming months on tax reform and entitlement reform and I’m ready and willing to have that debate. And if we need to put in place some kind of enforcement mechanism to hold us all accountable for making these reforms, I’ll support that too if it’s done in a smart and balanced way.”

A vote on the Republican bill was scheduled for Thursday evening but postponed amid last-minute bickering.

Republicans say proposals by Obama and other Democrats will increase the record $14.3 trillion deficit too much, thereby taking money from the budget to pay off interest on the debt.

Democrats say deficit reduction plans of Republicans are too drastic, potentially leaving millions of Americans without benefits and forcing hundreds of thousands of government employees to be laid off.

The biggest difference in the Republican and Democratic proposals is the size of the debt limit increase.

Democrats want authorization to increase the debt limit by $2.7 trillion. The Republican proposal would increase it by only $917 billion, ensuring it is only a short-term solution.

Senate Majority Leader Harry Reid (D-NV) said, “No Democrat will vote for a short-term Band-Aid that would put our economy at risk and put the nation back in this untenable situation a few short months from now.”

Senate Democrats sent a letter to House Republicans Wednesday night saying their plan had no chance of winning the required second round approval in the Senate.

All 51 Senate Democrats and two independents planned to vote against the Republican bill, the letter said. Even some Republicans complained about uncertainties of Boehner’s bill.

“I can’t vote for a bill that cuts only $1 trillion,” said Rep. Louie Gohmert (R-TX).

Boehner said at a press conference that his proposal was “a sincere, honest effort to end this crisis in a bipartisan way.”

He acknowledged tough opposition to it by saying, “This bill’s not perfect.”

Other differences in the two parties’ proposals include a Republican plan to cap new spending at $1.043 trillion in 2012, or $7 billion less than 2011 levels.

Democrats instead want to eliminate $1 trillion in war funding and save another trillion through reduced interest payments.

Republicans want a balanced budget amendment and a program to eradicate abuses of Social Security.

Democrats want to raise about $13 billion by auctioning airwave spectrum for cell phone service.

Sen. John McCain (R-AZ) urged Congress to resolve their differences as “disdain” grows among Americans.

“They want us to sit down and agree to something,” McCain said.

He also held out hope that the financial crisis would be resolved soon.

“I do believe this country is not going to go into default for the first time in history,” McCain said.

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