Bloomberg News

Obama Says Recovery Depends on Reining In Long-Term Debt

July 22, 2011

(Updates with Obama remarks beginning in third paragraph.)

July 22 (Bloomberg) -- President Barack Obama said that the government must rein in its long-term deficit to assure economic growth and that he’s willing to accept “tough” cuts to programs as long as they are balanced by raising more revenue through taxes.

Obama renewed his appeal for a deal with Congress on debt reduction that includes closing loopholes in the tax code for businesses and high-income individuals while trimming spending. Failing to reach such an agreement, he said, would hurt middle- income workers, the poor, students and older Americans.

“There’s simply too much debt on America’s credit card,” the president said at a town hall today at the University of Maryland in College Park, near Washington. “I’m willing to sign a plan that includes tough choices I would not normally make.”

Obama also said Congress must raise the federal debt ceiling. With 11 days to go before the Aug. 2 projected date when the government will run out of borrowing authority, the president was still struggling for a broad agreement with Congress to raise the $14.3 trillion debt limit while cutting spending by trillions of dollars and overhauling the tax code.

“Defaulting is not an option,” Obama said.

Neither Democrats nor Republicans are blameless for running up the deficit, Obama said. Still, he said, Congress must raise the debt ceiling to make sure that the U.S. continues paying the bills it has already run up.

House Speaker John Boehner, an Ohio Republican, emerged from a meeting of House Republicans today saying there is no agreement with the administration that will clear the way for a vote to raise the debt limit or cut the deficit.

Making Cuts

Obama said he is willing to make cuts in programs that many in his own Democratic Party “aren’t too happy about.” Cutting spending alone won’t shrink the deficit without damaging the economy, he said.

Congress also must take some steps to boost the economy in the short term, including extending last year’s payroll tax cut, setting up an “infrastructure bank” to provide loans to companies and passing three pending free trade accords, he said.

“There’s no doubt that this economy has not recovered as fast as it needs to,” Obama said. “The truth is, it’s going to take more time.”

The president used the town hall appearance to make the case for a sweeping package of debt reduction and revenue increases to stabilize the economy and create jobs. The event is one of more than a dozen public appearances that he has made recently to push for such an agreement.

Public Campaign

In the past two weeks Obama has done 10 interviews with local television stations, bringing his case to voters across the country, including in critical states such as Ohio and Pennsylvania, and made three appearances in the White House briefing room. In a July 21 interview with NPR and in an op-ed in USA Today, Obama urged lawmakers to do “something big and meaningful.”

At the university, Obama faced a largely friendly audience. Recruiting young voters was a crucial component of his strategy in the 2008 elections and will be again in his re-election bid next year.

The message he was seeking to deliver was that young people should be concerned about the health of programs, such as Social Security and Medicare, that largely benefit older people so they will be available in years to come.

“This is actually a debate about you and everybody else in America and the choices we face,” he said.

--With assistance from Laura Litvan, Mike Dorning, Kate Andersen Brower, Catherine Dodge, Kathleen Hunter, James Rowley, Peter Cook, Brian Faler and Richard Rubin in Washington. Editors: Joe Sobczyk, Leslie Hoffecker

To contact the reporters on this story: Victoria Pelham in College Park, Maryland, at vpelham@bloomberg.net; Roger Runningen in Washington at rrunningen@bloomberg.net

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


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