President Barack Obama, facing renewed battles with congressional Republicans over fiscal policy and the debt ceiling, accused his political opponents of diverting attention from the task of boosting the U.S. economy.
?With an endless parade of distractions, political posturing and phony scandals, Washington has taken its eye off the ball,? Obama said Wednesday in an address at Knox College in Galesburg, Illinois. ?I am here to say this needs to stop.?
Following months when the focus has been on the president?s second-term job appointees, his push for a new immigration law, attempts to block his signature health-care law and Republican-led investigations into his administration, Obama is seeking to refocus attention on the economy ? and how his policies have added to job growth and stability.
?Our focus must be on the basic economic issues that the matter most to you, the people we represent,? Obama said in the text of his speech. ?And as Washington prepares to enter another budget debate, the stakes for our middle class could not be higher.?
When lawmakers return from their August recess, they and the president will confront a host of decisions affecting the economy, including determining federal spending levels and the government running up against its US$16.7-trillion debt limit.
Congressional Republicans are staking their ground in fiscal negotiations that once again could pose the threat of default or a government shutdown ? the recurring theme surrounding efforts to reduce the nation?s deficit since 2011.
Confrontation Signalled
House Speaker John Boehner, an Ohio Republican, has signalled he?s ready for a confrontation with the White House and the Democratic-led Senate over the debt ceiling.
?We?re not going to raise the debt ceiling without real cuts in spending,? Boehner, an Ohio Republican, told reporters in Washington Tuesday. Obama has said he will refuse to to accept anything short of a clean debt-limit increase.
The president accused his critics of being short-sighted. He said the U.S. must continue to invest in education, training, infrastructure and research to maintain a competitive edge in the global economy.
?The countries that are passive in the face of a global economy will lose the competition for good jobs and high living standards,? he said.
Obama spent a portion of his speech criticizing Republicans for tying up the debt ceiling debate and budget cuts that have harmed government programs that can spur growth.
Debt Limit
?We?ve seen a sizable group of Republican lawmakers suggest they wouldn?t vote to pay the very bills that Congress rang up, a fiasco that harmed a fragile recovery in 2011, and one we can?t afford to repeat,? he said.
In the last round of debt ceiling debate two years ago, lawmakers and the White House battled for months before Obama signed an increase into law on Aug. 2, 2011, the day the Treasury Department warned that U.S. borrowing authority would expire.
While Standard & Poor?s stripped the U.S. of its AAA top credit rating as a result, investors indicated they weren?t concerned about the government?s debt or its ability to pay its bills. The yield on 10-year Treasury notes on Aug. 5, 2011, when S&P announced the downgrade, was 2.56%. The yield fell as low as 1.39% on July 24, 2012. As of Tuesday, the yield had risen to 2.50% amid speculation the Federal Reserve is closer to winding down its asset-purchase program.
Bernanke Warning
Fed Chairman Ben Bernanke told a congressional panel last week that another prolonged debate over the debt ceiling could hamper the recovery. He also said continued tight fiscal policy threatens to restrain growth.
Obama said Republicans have been unwilling to negotiate a replacement for the automatic across-the-board spending cuts known as sequestration, which he called a ?meat cleaver? to the budget.
Republicans said Obama is offering more of the same prescriptions he proposed since he was first elected. Senator John Cornyn released a statement before Obama arrived in Illinois saying the president got most of his economic package passed in his first term.
?We now know what the results have been,? Cornyn said. ?Add it all up, and we?ve been experiencing the weakest economic recovery in the longest period of high unemployment since the Great Depression in the 1930?s.?
Boehner Reaction
Boehner, in a House speech, said Obama?s address will accomplish nothing. ?It?s a hollow shell,? he said, ?it?s an Easter egg with no candy in it.?
He called on Obama to speed approval of TransCanada Corp.?s Keystone XL pipeline, delay implementation of the health-care law and ?stop threatening to shut down the government unless we raise taxes.?
It?s a hollow shell, it?s an Easter egg with no candy in it
Obama may be setting the stage for the coming negotiations over the debt ceiling and averting a government shutdown caused by a budget stalemate. The new fiscal year starts Oct. 1 and the debt ceiling by be hit in October or November.
?The content may be less important than what follows,? Nomura Holdings Inc. said in a note to clients Wednesday.
The Knox College speech was the first of a series that Obama plans to deliver over the next several weeks. He?s scheduled to speak on the same themes later today at the University of Central Missouri in Warrensburg and again tomorrow in Jacksonville, Florida.
Earlier Address
Obama gave a commencement address at Knox College in 2005, when he was a newly elected U.S. senator, that sought to define his economic vision, focusing on the struggles of middle-income Americans and the role of government in helping them succeed.
The themes of that speech were largely informed by what he saw during his 2004 Senate run, when a local Maytag plant was shut down and workers? jobs were shipped overseas.
?It churned up all the economic anxieties that middle class families were dealing with then and have been dealing with since,? said Robert Gibbs, a former senate aide who became Obama?s first White House Press Secretary.
Obama focused on America?s place as the economy became more globalized and how education, training, health care and changes in technology would play into the future.
The president often instructs his aides to go back and re-read the 24-minute address before significant speeches.
?He understood that this was a truly important speech, a truly important way of walking through the anxiety that people were feeling,? Gibbs said.
www.bloomberg.com
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