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Last updated: October 8, 2013 8:36 pm
Barack Obama said the White House was “exploring all contingencies” in the event that Congress failed to increase the country’s borrowing limit, but warned that there was no “magic wand” to brush away the threat of a default on US debt.
“No options are good in that scenario,” the US president told reporters on Tuesday, shrugging off the possibility that the White House could use creative solutions to keep borrowing – from invoking the 14th amendment of the constitution that says the validity of US debt shall not be questioned, to minting a $1tn coin.
Mr Obama and John Boehner, the Republican House speaker, remained far apart on Tuesday on the dual budget crises, the partial government shutdown and the debt ceiling, with both accusing the other of refusing to negotiate in good faith.
The president did not rule out the possibility that the US would prioritise debt payments over other government outlays, but said it would put the Treasury in the difficult position of having to choose which creditors to satisfy.
“There is no magic wand that allows us to wish away the chaos that could result if, for the first time in our history, we don’t pay our bills on time,” he said.
Mr Obama said Jack Lew, the Treasury secretary, would explain what preparations the US was making when he testifies before the Senate finance committee on Thursday.
At a press conference, Mr Obama reaffirmed his offer to open negotiations with the Republicans on the budget, perhaps with a newly appointed bipartisan congressional committee, but only after they end the shutdown and approve new US borrowings. “We can’t make extortion a routine part of our democracy,” Mr Obama said.
The president’s offer was also made in a phone call on Tuesday morning to Mr Boehner but was dismissed. Mr Boehner insists Mr Obama negotiate as part of any deal to reopen the government and lift the debt ceiling.
Mr Boehner, speaking after Mr Obama’s press conference, said Mr Obama’s position was that he would only talk “after the Republicans unconditionally surrender”.
“That’s not the way our government works,” he said, listing the numerous times in recent history when the debt ceiling had been used to make policy changes, including in August 2011.
Mr Obama said he was open to a short-term deal extending the debt ceiling and reopening the government as long as there were no conditions, to give Congress more room to reach a deal.
But he sounded sceptical that Republicans and Democrats would ultimately reach a consensus on fiscal policy, probably leaving the country in a similar position weeks from now. “Leaders on Capitol Hill can work through whatever process they want,” he added.
The Republicans have insisted on a delay to part of Mr Obama’s signature healthcare law, among other things, as the price of approving a new budget, and also attached conditions to congressional approval to lift the debt ceiling.
But as the stand-off has dragged on, the Republicans have gradually refocused their demands away from Obamacare and more on to the broader issues of cutting government spending.
More than a week after the government shutdown, and nine days before the debt ceiling is reached with potentially calamitous fallout, the White House, Democrats and Republicans have displayed few signs of compromise.
“There’s never been a president in our history that did not negotiate over the debt limit. Never. Not once,” Mr Boehner said.
Some legal scholars say the 14th amendment could be invoked to override the debt ceiling legislation.
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