Obama demands quick action to raise debt limit

Obama said he was willing to negotiate with Republican leaders about reining in deficit spending but insisted that those talks be separate from decisions to raise the federal debt ceiling and avert a possible first-ever national default.

“We are not a deadbeat nation,” he declared at a news conference, less than a week away from taking the oath of office for a second term.

Obama said Republicans who want to dramatically cut spending in return for raising U.S. borrowing limits “will not collect a ransom in exchange for not crashing the economy.”

Obama's remarks were in line with a newly toughened stance he has shown toward Congress a week before he is sworn in for a second term. The re-elected president has run his last race — U.S. presidents can serve no more than two terms — and has appeared willing to spend the political capital he believes he accrued after winning handily in November and seeing Democrats improve their numbers in Congress.

Obama made his remarks as a new Congress was settling in for its own new term. The new Congress is expected to be as deeply divided as the last, though Republicans face a smaller majority in the House and Democrats will enjoy a bigger majority in the Senate.

In Obama's first term, Democrats on the left accused him of giving ground too easily to Republicans on the debt ceiling issue during a huge partisan fight in the summer of 2011. That battle resulted in an unprecedented downgrade of the U.S. credit rating and left in place the contentious federal income tax cuts established during the George W. Bush administration.

Obama spoke at the 21st and final news conference of his first term, just days after he signed legislation that narrowly averted a fiscal cliff of automatic spending cuts and across-the-board tax incrSSeases as the Bush tax cuts expired on Jan. 1. A last-minute deal preserved the tax cuts for families earning less than US$400,000 per year and delayed the spending cuts.

Obama said he would consider future spending cuts to reduce the deficit, but only if they are done independently from a vote to raise the federal debt limit.

“The full faith and credit of the United States of America is not a bargaining chip,” he said. “And they better decide quickly because time is running short.”

In a blunt rebuttal to Republicans who say they will not agree to any more tax increases, the president said both taxes and spending must be on the table.

Within minutes, Senate Republican leader Mitch McConnell said the president and his allies in Congress need to get serious about spending, and the debt-limit debate is the perfect time for it.

“I do know that the most important issue confronting the future of our country is our deficit and debt,” McConnell said. “So we are hoping for a new seriousness on the part of the president with regard to the single biggest issue confronting the country, and we look forward to working with him to do something about this huge, huge problem.”

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