Obama: Default Akin to ‘Tax Increase on Everybody’

Posted July 15, 2011 at 11:22am

President Barack Obama warned Friday that a default on the debt would have the effect of a “tax increase on everybody,” but he said he was confident Congressional leaders would come together on a plan to at least “avert Armageddon.”

Obama said a default could raise interest rates for everyone, not just the government, with the same effect as a tax increase.

Obama said he still is pushing for a large package — and has reams of paper on his desk ready to go — provided Republicans show a willingness to accept some new revenue.

He’s given Congressional leaders another day or so to come up with a path forward. “If they show me a serious plan, I’m ready to move,” he said.

Obama said Republicans boxed themselves in with earlier statements but need to start listening to the public, 80 percent of which he said back a balanced approach to deficit reduction.

“This is not an issue of salesmanship to the American people,” he said. “The American people are sold.”

Obama also said he could not support a $2.4 trillion package consisting solely of cuts without revenues because it would cut unacceptably into domestic programs upon which people rely.

Obama gave qualified support to Senate Minority Leader Mitch McConnell’s (R-Ky.) proposal to let the president raise the debt limit, saying it would “at least avert Armageddon,” but he added it would fail to address the need to deal with the long-term debt.

He dismissed GOP efforts to pass a balanced budget amendment to the Constitution, saying that it would force deep cuts in Social Security and Medicare. He noted that it would be far more austere than even the House-passed budget authored by Budget Chairman Paul Ryan (R-Wis.).

He also said while he has come under fire from his party for showing a willingness to cut programs they support, Democrats should embrace getting the nation’s fiscal house in order because otherwise it will be difficult to get other Democratic priorities accomplished, such as rebuilding infrastructure or investing in education.

Obama also dismissed reports of friction at the meetings with Congressional leaders.

“I think this notion that things got ugly is just not true,” he said.

And, asked if he still had hope for a big package, he grinned, saying, “I always have hope. Don’t you remember my campaign?”

The president also said there could be political consequences for the GOP if they don’t bend. He said he hoped the American people would “remember at the polls” which party consistently took a “my way or the highway” position.