Obama talks about federal debt

The following remarks were made by President Barack Obama during a news conference in the East Room of the White House on Monday, Jan. 14.

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Please have a seat, everybody. Good morning. I thought it might make sense to take some questions this week, as my first term comes to an end.

It’s been a busy and productive four years. And I expect the same for the next four years. I intend to carry out the agenda that I campaigned on — an agenda for new jobs, new opportunity, and new security for the middle class. 

Right now, our economy is growing, and our businesses are creating new jobs, so we are poised for a good year if we make smart decisions and sound investments — and as long as Washington politics don’t get in the way of America’s progress.

As I said on the campaign, one component to growing our economy and broadening opportunity for the middle class is shrinking our deficits in a balanced and responsible way. And for nearly two years now, I’ve been fighting for such a plan — one that would reduce our deficits by $4 trillion over the next decade, which would stabilize our debt and our deficit in a sustainable way for the next decade. That would be enough not only to stop the growth of our debt relative to the size of our economy, but it would make it manageable so it doesn’t crowd out the investments we need to make in people and education and job training and science and medical research — all the things that help us grow.

Now, step by step, we’ve made progress towards that goal. Over the past two years, I’ve signed into law about $1.4 trillion in spending cuts. Two weeks ago, I signed into law more than $600 billion in new revenue by making sure the wealthiest Americans begin to pay their fair share. When you add the money that we’ll save in interest payments on the debt, all together that adds up to a total of about $2.5 trillion in deficit reduction over the past two years — not counting the $400 billion already saved from winding down the wars in Iraq and Afghanistan. 

So we’ve made progress. We are moving towards our ultimate goal of getting to a $4 trillion reduction. And there will be more deficit reduction when Congress decides what to do about the $1.2 trillion in automatic spending cuts that have been pushed off until next month. 

The fact is, though, we can’t finish the job of deficit reduction through spending cuts alone. The cuts we’ve already made to priorities other than Medicare, Medicaid, Social Security and defense mean that we spend on everything from education to public safety less as a share of our economy than it has — than has been true for a generation. And that’s not a recipe for growth.

So we’ve got to do more both to stabilize our finances over the medium and long term, but also spur more growth in the short term. I’ve said I’m open to making modest adjustments to programs like Medicare to protect them for future generations. I’ve also said that we need more revenue through tax reform by closing loopholes in our tax code for the wealthiest Americans. If we combine a balanced package of savings from spending on health care and revenues from closing loopholes, we can solve the deficit issue without sacrificing our investments in things like education that are going to help us grow.

It turns out the American people agree with me. They listened to an entire year’s debate over this issue, and they made a clear decision about the approach they prefer. They don’t think it’s fair, for example, to ask a senior to pay more for his or her health care, or a scientist to shut down lifesaving research so that a multimillionaire investor can pay less in tax rates than a secretary.

They don’t think it’s smart to protect endless corporate loopholes and tax breaks for the wealthiest Americans rather than rebuild our roads and our schools, invest in our workers’ skills, or help manufacturers bring jobs back to America. So they want us to get our books in order in a balanced way, where everybody pulls their weight, everyone does their part.

That’s what I want as well. That’s what I’ve proposed. And we can get it done, but we’re going to have to make sure that people are looking at this in a responsible way rather than just through the lens of politics.

Now, the other congressionally imposed deadline coming up is the so-called debt ceiling — something most Americans hadn’t even heard of before two years ago. I want to be clear about this. The debt ceiling is not a question of authorizing more spending. Raising the debt ceiling does not authorize more spending. It simply allows the country to pay for spending that Congress has already committed to. These are bills that have already been racked up and we need to pay them. 

So while I’m willing to compromise and find common ground over how to reduce our deficits, America cannot afford another debate with this Congress about whether or not they should pay the bills they’ve already racked up. 

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. Investors around the world will ask if the United States of America is, in fact, a safe bet.

Markets could go haywire. Interest rates would spike for anybody who borrows money — every homeowner with a mortgage, every student with a college loan, every small business owner who wants to grow and hire. It would be a self-inflicted wound on the economy. It would slow down our growth, might tip us into recession, and ironically, would probably increase our deficit. 

So to even entertain the idea of this happening — of the United States of America not paying its bills — is irresponsible. It’s absurd. As the Speaker said two years ago, it would be — and I’m quoting Speaker Boehner now — “a financial disaster, not only for us, but for the worldwide economy.” 

So we’ve got to pay our bills. And Republicans in Congress have two choices here: They can act responsibly, and pay America’s bills; or they can act irresponsibly, and put America through another economic crisis. But they will not collect a ransom in exchange for not crashing the American economy. The financial well-being of the American people is not leverage to be used. The full faith and credit of the United States of America is not a bargaining chip. 

And they better choose quickly, because time is running short. The last time Republicans in Congress even flirted with this idea, our AAA credit rating was downgraded for the first time in our history; our businesses created the fewest jobs of any month in nearly the past three years; and, ironically, the whole fiasco actually added to the deficit. 

So it shouldn’t be surprising, given all this talk, that the American people think Washington is hurting, rather than helping, the country at the moment. They see their representatives consumed with partisan brinksmanship over paying our bills, while they overwhelmingly want us to focus on growing the economy and creating more jobs. 

So let’s finish this debate. Let’s give our businesses and the world the certainty that our economy and our reputation are still second to none. We pay our bills. We handle our business. And then we can move on — because America has a lot to do. We’ve got to create more jobs. We’ve got to boost the wages of those who have work. We’ve got to reach for energy independence. We’ve got to reform our immigration system. We’ve got to give our children the best education possible, and we’ve got to do everything we can to protect them from the horrors of gun violence. 

And let me say I’m grateful to Vice President Biden for his work on this issue of gun violence and for his proposals, which I’m going to be reviewing today and I will address in the next few days and I intend to vigorously pursue.