Obama and Republicans Get Ready For The Real Fiscal Cliff Battle Over Debt and Spending

Obama GOP

President Obama who had hailed the last-minute deal that pulled America back from the “fiscal cliff”, issued a warning in his weekly address that he “will not compromise” over his insistence that Congress lift the government debt ceiling.

The President said in his radio and internet address that the fiscal cliff deal, approved by Congress late on New Year’s Day and signed on Thursday, raises tax on the wealthiest Americans while preventing a middle-class tax increase that could have thrown the economy back into recession.

With one crisis behind him, Mr Obama faces new battles in Congress over raising the country’s 16.4 trillion-dollar (£10.2 trillion) borrowing limit, as well as scaling back more than 100 billion (£62.5bn) in automatic spending cuts for the military and domestic programmes. The cuts are delayed by two months under the compromise.

Politicians promise to replace those across-the-board cuts with more targeted steps that could take longer to implement.

Mr Obama, speaking from Hawaii, where he is on holiday with his family, said he was willing to consider more spending cuts and tax increases to reduce the deficit. But he said he would not compromise over lifting the debt ceiling.

The nation’s credit rating was downgraded the last time politicians threatened inaction on the debt ceiling, in 2011.

“If Congress refuses to give the United States the ability to pay its bills on time, the consequences for the entire global economy could be catastrophic,” Mr Obama said. “Our families and our businesses cannot afford that dangerous game again.”

If elected officials from both parties “focus on the interests of our country above the interests of party, I’m convinced we can cut spending and raise revenue in a manner that reduces our deficit and protects the middle class”, he said.

In the Republican address, Rep Dave Camp of Michigan said that as attention again turned to the debt limit, “we must identify responsible ways to tackle Washington’s wasteful spending”.

Americans know that “when you have no more money in your account and your credit cards are maxed out, then the spending must stop”, he said.

Infighting has penetrated the highest levels of the House GOP leadership. Long-standing geographic tensions have increased, pitting endangered Northeastern Republicans against their colleagues from other parts of the country. Enraged tea party leaders are threatening to knock off dozens of Republicans who supported a measure that raised taxes on the nation’s highest earners.

“People are mad as hell. I’m right there with them,” Amy Kremer, chairman of the Tea Party Express, said late last week, declaring that she has “no confidence” in the party her members typically support. Her remarks came after GOP lawmakers agreed to higher taxes but no broad spending cuts as part of a deal to avert the “fiscal cliff.”

“Anybody that voted ‘yes’ in the House should be concerned” about primary challenges in 2014, she said.

At the same time, one of the GOP’s most popular voices, New Jersey Gov. Chris Christie, blasted his party’s “toxic internal politics” after House Republicans initially declined to approve disaster relief for victims of Superstorm Sandy. He said it was “disgusting to watch” their actions and he faulted the GOP’s most powerful elected official, House Speaker John Boehner, R-Ohio.


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