Bloomberg News

Obama Must ‘Show Leadership’ on Debt-Limit Talks, McCarthy Says

June 25, 2011

June 25 (Bloomberg) -- President Barack Obama will have to show some leadership if there is going to be any compromise to raise the nation’s debt limit and stave off a default, said Representative Kevin McCarthy, the third-ranking House Republican.

“He’s got to get off the golf course, and he’s got to get engaged,” McCarthy said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend.

McCarthy not only rejected any tax increases as part of an agreement, he insisted that limits on Medicare must be included in a bipartisan deal.

McCarthy, a third-term representative from California, dismissed ideas of eliminating tax breaks for oil companies or raising fees on banks as ways to narrow the U.S. deficit.

“In America today, we use 19 million barrels a day, and we produce roughly 7 million,” McCarthy said. “If you want to create a system that says we’re going to rely on more money being spent on oil in other countries that create jobs in other countries, I say no.”

Lower Medicare spending must remain part of any deficit- reduction package to save the government health insurance program for the elderly from bankruptcy, McCarthy said.

McCarthy, rejecting an idea put forward by Senate Republican leader Mitch McConnell of resorting to short-term increases in the debt limit, said lawmakers and the administration “can get to the point where we solve this problem” if Obama becomes more involved.

Walking Away

House Republican Majority Leader Eric Cantor of Virginia and the second-ranking Senate Republican, Jon Kyl of Arizona, walked away on June 23 from negotiations led by Vice President Joe Biden about ways to cut at least $1 trillion of federal spending and raise the nation’s $14.3 trillion debt ceiling before an Aug. 2 deadline.

The breakdown leaves it to Obama and congressional leaders such as House Speaker John Boehner to narrow differences over tax increases, Medicare cutbacks and other disputes that have bogged down negotiations. Obama will meet separately next week with McConnell and Senate Democratic leader Harry Reid in an effort to revive efforts at a compromise.

Last weekend, Obama played a round of golf with Boehner, an Ohio Republican, as the two made good on a commitment to work toward more bipartisan camaraderie.

The Treasury Department has said the U.S. risks defaulting on its obligations starting Aug. 2 without an increase in the debt ceiling, a threat underscored by warnings from Moody’s Investors Service and Standard & Poor’s that they may consider downgrading the U.S. credit rating.

Medicare Changes

McCarthy said that, despite public disapproval of a Republican plan by House Budget Committee Chairman Paul Ryan to overhaul Medicare, his party hasn’t lost the argument on that issue.

By 57 percent to 34 percent, respondents to a Bloomberg National Poll conducted June 17-20 say they would be worse off if the Republican plan to convert Medicare to a system of subsidized private health coverage were adopted.

Fifty-eight percent of independents, a critical voting bloc in recent elections, say they would be worse off.

“If you ignore Social Security, Medicare and Medicaid, in a few short years, it’ll take every single dollar that government brings in,” McCarthy said.

On next year’s presidential election, McCarthy said his party needs a “strong leader” for its nominee.

“I want a leader that sets out a path,” he said. “I want one that doesn’t just talk about cuts, but talks about the shining city on the hill. We’re only going to get out of this problem if we grow this economy.”

McCarthy, who was the chief recruiter of Republican candidates for the House in last year’s elections where his party won control of the chamber, said he hasn’t yet seen any candidate set out such a path.

--Editors: Bob Drummond, Laurie Asseo.

To contact the reporter on this story: Catherine Dodge in Washington at cdodge1@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net


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