Taking a turn as his own “Secretary of Explainin’ Stuff,” President Barack Obama called an impromptu press conference Tuesday and warned House Republicans that a first-of-its-kind U.S. default would amount to an economic “nuclear bomb” dropped on the fragile economy.
Obama repeated his demands that Congress reopen the partially shuttered government and extend the country’s ability to borrow to pay its bills, saying that only then will he engage in "serious negotiations" about getting America's long-term fiscal affairs in order.
“I’m not budging,” said the president.
Throughout the hourlong question-and-answer session, during which he was not asked about Obamacare’s botched roll-out, the president took pains to counter lawmakers whose argument he mocked as “let's take default out for a spin and see how it rides.”
He called that an “insane” policy that would have a “catastrophic” impact on the economy, spreading “chaos” and even precipitating a “worldwide catastrophe.”
But he also cracked the door open to compromise with House Republicans on two fronts. First, he signaled that he could accept legislation that would reopen government and extend the country’s ability to borrow in order to pay its bills for a matter of weeks. Second, he did not completely dismiss a House Republican-backed proposal to link such legislation to the creation of a mechanism — perhaps a special committee — that would serve as the framework for future talks on issues like entitlement reforms.
“They can attach some process to that that gives them some certainty that in fact the things they're concerned about will be topics of negotiation, if my word's not good enough,” he said.
Once government is reopened and the debt ceiling raised, “I will talk about anything,” the president said.
“If they want to do that, reopen the government, extend the debt ceiling. If they can't do it for a long time, do it for the period of time in which these negotiations are taking place,” he said.
Speaking to reporters after Obama’s speech, Republican House Speaker John Boehner rejected the president’s offer for a short-term remedy that would temporarily raise the debt limit and reopen the government, saying doing so would amount to “unconditional surrender” from Republicans.
Boehner reiterated his call for the president to negotiate terms under which Republicans could agree to both measures and demanded that Obama give up on his demand for a bill with no strings attached.
“The long and the short of it is, there’s going to be a negotiation here. We can’t raise the debt ceiling without doing something about what’s driving us to borrow more money and live beyond our means,” Boehner said. “The president’s position that we’re not going to sit down and talk to you unless you surrender is just not sustainable. It’s not our system of government.”
The president again argued that there are enough votes in the Republican-held House of Representatives to pass a "clean" stopgap spending measure — one without GOP preconditions. Boehner has denied that and has refused to bring such a measure up for a vote. The two leaders spoke Tuesday but could not even agree on how to characterize the conversation.
The government partly closed last week after House Republicans sought to use must-pass spending legislation to roll back the president's health care overhaul. The White House — aided by united Senate Democrats — refused.
The Treasury Department estimates that the federal government will hit the debt ceiling on Oct. 17 — after which it will not be allowed to borrow funds necessary to pay its existing bills. Officials estimate that there could be a brief period before a first-of-its-kind default on Washington’s obligations, which economists predict would rock the fragile global economy.
Obama took particular aim at the notion that he could simply prioritize payments to avoid a default on debt payments and warned that this would not fool global markets.
“It is out of touch with reality. It is based on a flawed analysis of how our economy works. You cannot pay some bills and not others and think somehow that the fact that you're paying some bills protects you from a loss of creditworthiness,” he said.
“That's not what happens in our own personal lives. I don't know why people think that that's how it works for the United States government,” the president said.
And he also played down the possibility that Treasury Secretary Jack Lew could work some kind of financial magic to pay America’s bills far beyond the Oct. 17 deadline.
“Jack Lew has used extraordinary measures to keep paying our bills over the last several months. But at a certain point those emergency powers run out, and the clock is ticking. And I do worry that Republicans but also some Democrats, may think that we've got a bunch of other rabbits in our hat,” he said. “There is no silver bullet. There is no magic wand that allows us to wish away the chaos that could result if, for the first time in our history, we don't pay our bills on time.”
In a sign how much shutdown politics have dominated the news over the past week, the president was not asked any questions about the deeply flawed launch of Obamacare's 'exchanges' where people can buy health care insurance.