Obama tells Americans he could default.
On TV, the president talks about not paying Social Security checks on August 3rd; "Simply put, there may not be money in the coffers to do that"; pressure on Republicans.
US President Barack Obama said today that he cannot guarantee that Social Security checks will be issued on August 3rd if the Democratic and Republican parties do not reach an agreement in the coming weeks on the issue of the government's debt limit. "I can't guarantee that those checks will go out on August 3rd if we haven't resolved this issue. Because, simply, there may not be money in the coffers to do it," the president stated in an interview with CBS News.
The legal debt limit of $14,29 trillion was reached in mid-May, and the country's Treasury Department said it can only keep the government running until August 2nd, unless Congress changes the debt ceiling.
In ongoing negotiations, the Republican Party, in opposition to Obama, has conditioned its support for raising the debt ceiling on the approval of major spending cuts. Democrats, on the other hand, want to raise taxes on the wealthiest and eliminate some tax breaks for large corporations, in addition to advocating for maintaining spending on important social programs.
Below is a news article from 247 regarding the United States' financial difficulties:
247 - The United States is heading towards an unprecedented default on its debts with the market. Last night, a meeting at the White House between President Barack Obama, Vice President Joe Biden, and eight members of the US Congress, including the Speaker of the House of Representatives, John Boehner, ended without practical results. The government wants to operate without the $14,9 trillion debt ceiling – which will be reached on August 2nd. From that date, under current rules, the American administration will no longer have the resources to meet its commitments, such as redeeming bonds held by investors worldwide. Congress, however, refuses to release the government from the debt ceiling without obtaining, in return, measures to increase tax revenue and cut public spending. The most that the White House meeting produced was the scheduling of a new meeting for today. "The president was visibly frustrated," one of the participants told USA Today.
The demand from lawmakers to raise the US debt ceiling is for a federal program that would increase revenue by $1 trillion and reduce government spending by $3 trillion. The problem is that Obama and Biden's promises in this regard are not convincing Republicans, who refuse to release more money for the government to meet its existing commitments. If the impasse continues, it will lead to default starting August 2nd.
The prospect of the world's largest economy defaulting on its debt is raising tensions at the highest levels of the global economy. "I can't imagine for a second that the United States could default," IMF Managing Director Christine Lagarde told The Wall Street Journal. "That would be a real shock and bad news for the US economy." She added that a US default would "certainly compromise the stability" of the global economy. "I hope there will be enough intelligence from both parties and an understanding of the challenge that lies ahead for the United States, but also for the rest of the world," she stated.