Raising the debt ceiling is not a licence to spend more money, Obama said Monday at the last press conference of his first term. Rather, he said, it would allow Treasury to pay financial obligations already authorised by lawmakers.
"America cannot afford another debate with this Congress about whether or not they should pay the bills they've already racked up. ... We are not a deadbeat nation."
But Republicans, who control the House of Representatives, appear to be equally adamant, saying they would not support a debt ceiling increase unless it is matched or exceeded by spending cuts.
"The consequences of failing to increase the debt ceiling are real, but so too are the consequences of allowing our spending problem to go unresolved," said Republican House Speaker John Boehner in response to the president's comments.
Meanwhile, the Treasury Department followed up Obama's call with a missive to Congressional leaders saying it will run out of ways to keep the country under the legal borrowing limit sometime between mid-February and early March.
US borrowing officially hit its $16.394 trillion legal limit Dec 31. As a result, until the debt ceiling is raised, Treasury is not allowed to borrow new money to help it pay all the country's financial obligations.
To cover near-term borrowing needs, Treasury has begun using "extraordinary measures", or cash management through selective payments, to harvest $200 billion.
"If extraordinary measures were allowed to expire without an increase in borrowing authority, Treasury would be left to fund the government solely with the cash we have on hand on any given day," Treasury Secretary Tim Geithner said in a letter to congressional leaders.
(Arun Kumar can be contacted at arun.kumar@ians.in)
