US President Barack Obama
Source: Press TV
US President Barack Obama has warned of “serious” damage to the country's economy if the Republican-Democrat dispute over raising the US government debt limit continues.
“It's a dangerous game we've never played before, and we can't afford to play it now,” Bloomberg quoted Obama as saying on Monday.
“We can't allow the American people to become collateral damage to Washington's political warfare,” he went on to say.
The US Treasury Department says the country will not be able to pay all its financial obligations and will default on its debt for the first time in history on August 2, unless the $14.3 trillion debt limit is raised. Yet, no deal is yet in sight between the Republican and Democrat lawmakers in the Congress and Senate over the looming crisis.
On Monday, Republicans proposed a new deficit reduction plan based on the principles of the cut, cap and balance bill, which was earlier rejected by the Democratic-led Senate.
The GOP is demanding a short-term debt limit increase that would force the US president to request more borrowing authority before the presidential election in November 2012.
In contrast, the Senate Democrats, headed by the Senate Majority Leader Harry Reid, has backed up an alternative plan which would raise the debt ceiling by $2.4 trillion while also cutting $2.7 trillion in future spending, according to a recent statement by Reid.
Obama has rejected the Republican solution to the crisis, pointing out that a partial lifting of the debt ceiling would lead to a similar stalemate next year.
The incumbent US president has urged Americans to step up pressure on Republican leaders to agree with what he calls a "balanced approach to raise the debt ceiling."
However, Republican House Speaker John Boehner, appeared on TV shortly after Obama's speech, stressing the American people would not accept an increase in the debt without significant spending cuts and reforms.
“The president has often said we need a 'balanced' approach -- which in Washington means: We spend more, and you pay more,” Boehner said in his televised response.
“The sad truth is that the president wanted a blank check six months ago, and he wants a blank check today. This is just not going to happen,” he noted.
The United States hit its borrowing limit of $14.3 trillion on May 16, up from $10.6 trillion when Obama took office in 2009.