Economy
3:31 am
Tue October 1, 2013

As Partial Shutdown Begins, A Bigger Fight Looms

Originally published on Tue October 1, 2013 5:35 am

Transcript

STEVE INSKEEP, HOST:

Now, even as a partial shutdown begins, a bigger fight looms. A default on federal debt obligations could have global effects. Federal borrowing authority expires in the middle of this month. House Republicans have said they will not extend the debt ceiling unless President Obama accepts a long list of their agenda items. And that was on the president's mind when we sat by the Oval Office fireplace yesterday.

Regardless of the budget situation there is a debt ceiling approaching in a little more than two weeks. You said you will not negotiate over an extension of the debt ceiling. I just want to make sure that I'm clear on that. If there is no agreement, if the debt ceiling is - debt limit is reached, if the United States is going into default or at risk of going into default, you absolutely will not negotiate, even in that circumstance?

PRESIDENT BARACK OBAMA: Absolutely I will not negotiate. And the reason, Steve, is because if we establish a pattern whereby one faction of one party controlling one chamber in Congress can threaten default, that the United States America is no longer meeting its obligations and fulfilling the full faith and credit of the United States unless they get 100 percent of what they want, then we've established a pattern that fundamentally changes the nature of our government.

At that point, any president, not just me, any president is subject to that kind of blackmail continuously. If you had a Republican president in here and a Democratic speaker said we're not going to raise the debt ceiling unless you pass background checks on guns, we're not going to pass the debt ceiling unless you raise the corporate income tax by 30 percent, you know, that Republican president would find him or herself in a similar position.

That's not how our Constitution was designed. Raising the debt ceiling is not raising the debt. It is simply saying Congress is authorizing the Treasury to pay for those things that Congress has already approved.

INSKEEP: So a potential debt ceiling crisis approaches even as the president tries to manage ordinary business. He had hoped to name a new Fed chairman by now, giving Congress time to act this year to find a successor to Ben Bernanke. As he pondered that decision, I asked if the president wants the next Fed chair to change course for the Fed. He began by noting that the Fed has a dual mandate. One part is protecting the currency.

OBAMA: Part of that mandate is also full employment, making sure that the economy is growing in such a way that people have the chance to succeed.

INSKEEP: Should the Fed be doing more in that department?

OBAMA: Well, I think that the Fed has to constantly monitor where the economy's moving, but we can't put the entire burden on the Fed. And this brings us back to the original point about potential government shutdowns or potential default because we're not paying our bills. We have dug ourselves out of a deep hole and the economy now has grown. We've created jobs for 42 consecutive months. We've created 7.5 million new jobs.

Manufacturing's come back in ways that many people would not have anticipated. The deficit, which was the main rationale back in 2011 for Republicans to engage in this brinkmanship, has gone down faster than any time since World War II and has been cut by more than half since I came into office. So when you combine that with the fact that we're producing more energy than ever before, that we still have the most creative businesses in the world, the most creative and effective and productive workforce in the world, we've got all the ingredients we need to succeed.

What's holding us back are the bad policy decisions that have been forced on the American people by a faction of the Republican Party. And if we can just get out of gridlock and stalemate mode, make some basic decisions, deal with our long term debts, but recognize that we also have to invest in what it takes to grow the middle class right here and right now, then the burden won't be all on the Fed.

The Fed won't have to take as many extraordinary measures to make up for the failures of the political system. And now is the time for us to do that, because...

INSKEEP: Has the delay in choosing a new chairman hurt the Fed?

OBAMA: No, because I think that Ben Bernanke's done an outstanding job. He's maintained confidence, and whoever I appoint, I think, will continue many of the smart policies that Ben Bernanke's made. But Ben Bernanke himself has said that his job would be a whole lot easier and the next Fed chairman's job would be a whole lot easier if Congress started doing what it's supposed to be doing.

INSKEEP: Mr. President, thanks very much.

OBAMA: Thank you so much, Steve.

INSKEEP: And we'll hear more of that interview elsewhere on this program, which, of course, is MORNING EDITION from NPR News. Transcript provided by NPR, Copyright NPR.