Obama digs in heels, refuses to negotiate debt ceiling

At a White House news conference called to promote his position on the budget, Obama vowed not to trade cuts in government spending sought by Republicans in exchange for raising the borrowing limit.

"What I will not do is to have that negotiation with a gun at the head of the American people," he said.

With an agreement to prevent the economy falling over a "fiscal cliff" barely two weeks old, Washington has already begun skirmishing over a new fiscal issue: the debt ceiling, which fixes a limit on how much the government can borrow.

The United States could default on its debt if Congress does not increase the borrowing limit, a prospect Federal Reserve Chairman Ben Bernanke warned against in separate comments on Monday.

Obama has tangled repeatedly with Congress over budget and spending issues, and on Monday he said Republicans would bear the responsibility for the consequences of a default.

"They can act responsibly, and pay America's bills or they can act irresponsibly, and put America through another economic crisis," he said. "But they will not collect a ransom in exchange for not crashing the American economy."

Republicans want Obama to cut some spending to rein in the deficit before they agree to raise the debt limit again.

Obama must get "serious about spending and the debt limit is the perfect time for it," Senate Republican leader Mitch McConnell said. "The American people do not support raising the debt ceiling without reducing government spending at the same time," said Republican John Boehner, the House of Representatives speaker.

The last debt ceiling fight, in 2011, upset world financial markets. Obama cast the borrowing issue as one that will affect many Americans and sensitive industries.

"If congressional Republicans refuse to pay America's bills on time, Social Security checks and veterans' benefits will be delayed. We might not be able to pay our troops, or honor our contracts with small business owners. Food inspectors, air traffic controllers, specialists who track down loose nuclear material wouldn't get their paychecks," he said.

Obama reminded Republicans that he won the November election partly on his approach to fiscal issues.

The debt limit is one of a trio of deadlines looming around the end of February, including automatic deep spending cuts that were temporarily put off in the "fiscal cliff" deal, and the end of a stopgap government funding measure.

A number of Republicans have said they would be willing to allow a U.S. debt default or a government shutdown to force the Obama administration to accept deeper spending cuts than the White House would like.

Obama's unexpected news conference could have been a pre-emptive strike aimed at influencing strategy sessions among Republican lawmakers scheduled for later this week.

The Treasury Department warned on Monday that the United States will run out of ways to prevent a default in mid-February or early March if the $16.4 trillion ceiling on borrowing is not raised.

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