Obama warns against 'dangerous' debt game

“As I said earlier this week, one thing I will not compromise over is whether or not Congress should pay the tab for a bill they've already racked up,” the president said in his weekly radio and Internet address.

“If Congress refuses to give the United States the ability to pay its bills on time, the consequences for the entire global economy could be catastrophic,” he pointed out.

Obama recalled that the U.S. economy “suffered” and congressional Republicans clashed over national debt in 2011, a row that resulted in a downgrade of the U.S. credit rating.

“Our families and our businesses cannot afford that dangerous game again,” the president pointed out.

The United States reached its legal borrowing limit of US$16.4 trillion on Monday. Now Congress has about two months to raise the debt ceiling to allow more government borrowing or risk causing the government to default on its bills and financial obligations.

A bipartisan “fiscal cliff” deal passed by Congress later in the week did not address the debt ceiling issue.

Republicans, who accepted this deal without any significant spending cut, are now demanding concessions on expenditures in return for allowing the ceiling to rise.

House Speaker John Boehner has warned the Republicans will ask for “significant spending cuts” and reforms of expensive programs like Social Security and Medicare that provide pensions and health care services for the nation's senior.

Obama said he was for spending cuts without shortchanging things like education, job training, research and technology.

“But spending cuts must be balanced with more reforms to our tax code,” he said. “The wealthiest individuals and the biggest corporations shouldn't be able to take advantage of loopholes and deductions that aren't available to most Americans.”

In a Republican response, House Ways and Means Committee Chairman Dave Camp of Michigan said politicians must identify responsible ways to tackle Washington's spending.

“We're crushing today's small businesses and the next generation of Americans under a mountain of debt,” Camp said. “We're selling their future, and our country's financial independence, to China.”

China is the largest foreign holder of U.S. debt, owning about US$1.2 trillion in U.S. treasury bills, notes and bonds, according to the Treasury Department. In total, China owns about eight percent of publicly held U.S. debt.

Camp accused the president and Democrats in Congress of refusing to take “any meaningful steps to make Washington live within its means” and urged them to reconsider their position and join the fight on what he called “wasteful spending.”

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