Obama chastises GOP on debt

WASHINGTON - President Obama sharply intensified criticism of congressional Republicans in negotiations over the federal debt, depicting GOP leaders as supporting tax breaks for jet-setting corporate executives at the expense of college scholarships or medical research.

Obama's decision to chastise Republican leaders in a news conference Wednesday moved the debt talks out of the realm of closed-door Washington meetings and into full public view, setting off a high-stakes effort to mobilize public opinion.

Obama and Republicans have been locked for more than a month in a confrontation over raising the nation's borrowing limit. Republicans have insisted they will not approve the increase unless Obama and congressional Democrats agree to reduce the debt in the long term, with no tax increases. Last week, top Republicans pulled out of discussions with Vice President Biden, objecting to a White House demand that any deal include additional revenue as well as spending cuts.

The news conference represented a rare use of the presidential megaphone for Obama, as he defended his position.

"These are bills that Congress ran up," Obama said, in explaining why the United States must not default on its debt obligations. "They took the vacation. They bought the car. Now they're saying, 'Maybe we don't have to pay.' "

Obama chided lawmakers for taking frequent recesses instead of staying in Washington to finish work on the debt question, going so far as to add that his two young daughters exhibit more diligence in doing their homework than Congress has shown. "They don't wait until the night before," he said. "They're not pulling all-nighters. Congress can do the same thing."

Reacting to the criticism, senators considered abandoning a weeklong July 4 recess, and House leaders said they would stay in session until negotiations were finished.

But Republican leaders offered scant hope of a shift on the issue of tax revenues. "The president is sorely mistaken if he believes a bill to raise the debt ceiling and raise taxes would pass the House," said House Speaker John A. Boehner (R., Ohio.).

Among the GOP rank-and-file, some indicated they would consider new revenue sources, posing a potential challenge to party unity. "I'm not too sympathetic to all these jets myself, so I'd be willing to consider that," said Sen. Jeff Sessions of Alabama, top Republican on the Budget Committee.

Others said it would depend on which loophole was being eliminated. "I'm willing to take a look at the special deals," said Sen. Ron Johnson (R., Wis.). "I would love to do away with special tax breaks, but not legitimate business deductions."

Obama cited the high-profile tax break offered to owners of corporate jets several times in the news conference, even though it would bring in only an estimated $3 billion over 10 years. Other Democratic proposals would net $41 billion over 10 years by tightening oil and gas tax credits and $21 billion by eliminating credits for hedge-fund managers.

The largest Democratic tax proposal would limit the deductions that may be claimed by those earning more than $500,000 a year. In all, the White House said earlier this year that it wanted $760 billion in new revenue over 10 years.

The government reached the limit of its borrowing ability in May, and federal officials warn that maneuvers to continue paying the nation's bills will be exhausted by Aug. 2, risking a default on federal obligations.

Underscoring the concerns, the International Monetary Fund warned in a report Wednesday that failure by Congress to raise the borrowing limit could result in "a severe shock to the economy and world financial markets."

Treasury Secretary Timothy Geithner strongly criticized a GOP proposal that would prioritize interest payments on the nation's debt and cut spending rather than raise the borrowing limit. He said the idea was "a radical and deeply irresponsible departure" from previous practices by presidents of both parties.

Many Republicans regard the administration's warnings as a scare tactic and refuse to raise the debt ceiling without major reductions in the nation's deficit, chiefly through spending cuts. They oppose new revenue from any source, even unpopular credits and loopholes.

"The corporate-plane tax hike that the president now wants would bring in about $3 billion in new taxes," said Don Stewart, a spokesman for Senate Republican leader Mitch McConnell of Kentucky. "The president wants hundreds of billions in new taxes. Where would they get the rest?"

Democrats have countered that its significance is symbolic, showing that many Republicans refuse to consider even such obvious measures.

Obama painted a stark image of the winners and losers under the debt deal favored by Republicans. Oil companies that are already making money "hand over fist," he said, would continue to receive taxpayer subsidies, at the expense of "a bunch of kids out there who are not getting college scholarships."

Medical research would be undermined and food inspection would be weakened if the Republicans pursue their "maximalist position," the president said.

"If you're a wealthy CEO or a hedge-fund manager in America right now, your taxes are lower than they have ever been," he said. "You'll still be able to ride on your corporate jet; you're just going to have to pay a little more."

He added: "It would be nice if we could keep every tax break there is. But we've got to make some tough choices here" to reduce the deficit.