Obama says spending cuts needed to raise debt ceiling: report

Reuters News
Posted: Apr 15, 2011 1:45 PM
Obama says spending cuts needed to raise debt ceiling: report

WASHINGTON (Reuters) - A compromise with Republicans on spending cuts will be necessary in order to raise the U.S. debt ceiling, President Barack Obama said in an interview with the Associated Press on Friday.

Obama, a Democrat, said some questions about such cuts would have to be left for after the 2012 presidential election, when he hopes to win a second term in office.

Obama said the world could plunge into a new recession if the United States were to default on its debts, according to the AP. He voiced confidence that Congress would lift the nation's debt ceiling, AP said.

Congress is under pressure to raise the $14.3 trillion borrowing limit before it is reached as early as mid-May.

But Republicans are unwilling to do so without spending cuts and have threatened to take negotiations to the deadline.

"I think it's absolutely right that it's not going to happen without some spending cuts," Obama told the AP.

The Treasury has forecast that the ceiling will be reached by May 16. It can take emergency measures to avoid hitting the debt ceiling but those actions will only buy the United States a limited amount of time -- until about July 8.

After that date the Treasury Department will be unable to borrow money to fund government operations such as paying interest on U.S. debt.

Brendan Buck, an aide to Republican House Speaker John Boehner, said it was encouraging that Obama understood the need for cuts.

"The speaker has told the president many times that the American people will not tolerate an increase in the debt ceiling without significant spending cuts and reforms," Buck said. "It's encouraging he may now be getting that message."

(Writing by Jeff Mason; Editing by Bill Trott)