WASHINGTON — With America’s global credit standing suddenly in question, President Barack Obama insisted Tuesday that Washington has the political will to slash the massive U.S. debt despite fierce, fundamental differences with Republicans about how to do it.
Obama spoke hopefully of compromise with GOP lawmakers, yet still used a campaign-style town hall event to accuse the Republicans of offering a bleak future for the poor, young and elderly with their proposals.
The president seemed intent on assuring financial markets and the watching world that U.S. leaders will get their act together to address a suffocating debt — while at the same time trying to convince voters that only his plan would share the pain fairly.
Republicans didn’t sound optimistic about compromise.
House Speaker John Boehner announced Tuesday that he had picked House Majority Leader Eric Cantor to work with a White House commission on cutting spending. But in doing so, Boehner said, “The American people understand we can’t keep spending money we don’t have. The only ones who don’t are the Democrats running Washington.”
More upbeat, Obama said, “Here’s the good news: I believe that Democrats and Republicans can come together to get this done.” Speaking at Northern Virginia Community College outside Washington, he said, “There will be those who say that we’re too divided, that partisanship is too stark. But I’m optimistic.”
Obama never mentioned the new context for his comments: a warning that the federal government must rein in its debt or risk losing its sterling credit rating, which could in turn erode the economic recovery. On Monday, Standard and Poor’s, a key credit rating agency, lowered its outlook for the government’s fiscal health to “negative” amid sliding confidence in Washington’s ability to deal with its debt.
The president said that over the past five months — in other words, since Republicans altered the dynamic in Washington by winning control of the House in midterm elections — the two parties have come together to strike some unexpected deals.
However, both of the major agreements happened only under duress: first to prevent a middle-class tax hike, then to avoid a government shutdown.
The optimism Obama expressed about cooperation on the debt was hard to find even in the cases where both sides were cooperating.
Though the bipartisan debt negotiations, led by Vice President Joe Biden, are to begin on May 5, Republicans in the House and Senate are insisting they won’t vote to raise the nation’s fast-approaching borrowing limit unless Obama agrees to more spending cuts now.
Longer term, both Obama and the House Republicans have offered plans to trim trillions from yearly deficits over the next decade or so. Fueled in part by an angry populace, Obama and the GOP agree that cutting the nation’s debt is essential for growth, stability and the well-being of the next generation. Said Obama on Tuesday: “If we keep on spending more than we take in, it’s going to cause serious damage to our economy.”
The annual government deficit is projected to be $1.6 trillion this year and only worsen as the baby boom generation retires and Medicare costs grow.
What’s left is an enormous disagreement about how to deal with the imbalance. Obama is traveling across the country this week with his plan for reducing defense spending and health care costs, increasing taxes on the wealthy and protecting priorities he deems untouchable.
His pitch overlaps with the just-beginning 2012 presidential campaign, which could well be defined by this debate over the role of government.
The House Republican blueprint would overhaul Medicare and Medicaid, cut the top income tax rate but eliminate some tax breaks and shrink most discretionary spending to where it was before Obama took office in 2009.
In the town hall, Obama took aim at all that.
On transportation, for example, Obama said, “Well, so what, we cut transportation by a third, and what’s going to happen to America? We’re just going to have potholes everywhere? We’re just going to have bridges collapsing everywhere?”
So it went throughout comments sure to be repeated in other town halls this week. Obama accused Republicans of wanting to cut taxes for the rich at the expense of early education for children or health care for seniors, poor kids and the disabled.
“That’s not who we are as a country,” he said. “We’re better than that.”
Obama spoke in a state that he won in 2008, becoming the first Democrat to carry Virginia in a presidential race since 1964. Republicans rebounded to win the governor’s race in 2009 and dominate congressional races in 2010. Obama is vying to reclaim Virginia now.
He made an appeal to the student-dominated crowd to help him, not overtly with his re-election, but instead by backing him in this fight.
“There’s a way to solve this deficit problem in an intelligent way that is fair and shares sacrifices so that we can share opportunity all across America,” Obama said. “But I can’t do that if your voices are not heard. There are powerful voices in Washington; there are powerful lobbies and special interests in Washington. And they’re going to want to reduce the deficit on your backs.”