Beset by a weak jobs report, President Barack Obama on Friday called for swift action by Congress to raise the nation's borrowing limit, saying the uncertainty over the debt ceiling has hindered hiring in the private sector.
In remarks in the White House Rose Garden, the president linked two of the most high profile issues facing his presidency — the weak economy and a massive budget deal to meet an Aug. 2 deadline to increase the debt limit.
"The sooner we get this done, the sooner that the markets know that the debt limit ceiling will have been raised and that we have a serious plan to deal with our debt and deficit, the sooner that we give our businesses the certainty that will need in order to make additional investments to grow and hire," Obama said.
He made his remarks just hours after the government reported anemic job growth for June and a new, higher unemployment rate of 9.2 percent.
Obama said uncertainty over raising the debt ceiling — currently capped at $14.3 trillion — was one of several factors that have contributed to an economic slowdown and weaker job creation. He also listed natural disasters, high gas prices, state and local budget cuts and the fiscal crisis in Greece.
"The economic challenges we face weren't created overnight and they're not going to be solved overnight," he said.
Obama met Thursday with the top eight leaders of Congress and has called them back for a rare weekend meeting on Sunday. He met privately Friday morning with the top House Democrat, Nancy Pelosi, amid Democratic concerns over proposals to cut spending for Social Security, Medicare and Medicaid as part of the budget deal.
Obama and congressional negotiators are looking at closing some tax loopholes and cutting popular social benefit programs as they struggle to reach an agreement between Republicans and Democrats, but Pelosi and many House Democrats oppose cutting the benefit programs. Pelosi was getting an opportunity to air her views as she met privately with Obama.
"We are not going to balance the budget on the backs of America's seniors," Pelosi said Thursday.
The endgame on the debt talks was approaching as the Labor Department reported hiring slowed to a near-standstill in June. Employers added the fewest jobs in nine months and the unemployment rate rose for the third month in a row, climbing to its highest point this year.
That gave Republicans fresh ammunition to attack Obama's handling of the economy even as the shape of an agreement remained in doubt. All the while the nation is moving closer to an Aug. 2 deadline to raise the government's debt ceiling or face an unprecedented default on U.S. obligations that the administration warns could add a perilous new crisis on top of the already quavering economy.
Obama was pushing for an ambitious deficit reduction plan of roughly $4 trillion, the biggest of three options he laid on the table. It would require sizeable tax revenues, which many Republicans oppose, and spending reductions for entitlement programs, opposed by many Democrats. But the idea of a potentially historic deal was well received by the meeting participants, officials said later, even though the details remained in dispute.
After Thursday's 90-minute session, Obama said Democrats and Republicans should be prepared to show their bottom-line demands when they return to the bargaining table Sunday.
The negotiating stakes are high. Without a deal on deficit reduction, Republican leaders say they don't have enough GOP votes to increase the nation's borrowing authority, raising the danger of the first ever U.S. default on its debts when the current $14.3 trillion debt ceiling is tapped out.
"Everybody acknowledged that we have to get this done before the hard deadline of Aug. 2 to make sure that America does not default for the first time on its obligations," Obama said. "And everybody acknowledged that there's going to be pain involved politically on all sides."
That leaves little time to agree on 10-year deficit reductions of $2 trillion to $4 trillion.
The major clash centers on how to reduce spending on major entitlement programs such as Medicare, Medicaid and Social Security, all prized by Democrats, and on tax changes that would close loopholes and end certain corporate breaks. Republicans insist that any tax changes be used to lower rates on corporations and individuals; Obama wants them also to generate more tax revenue.
Increasing the debt ceiling through the end of 2012 — a date favored by the White House — would require authorizing about $2.4 trillion in additional borrowing. House Speaker John Boehner has insisted on a 10-year deficit reduction figure that, at a minimum, matches the amount of additional borrowing. One aide to a lawmaker in Thursday's meeting said Obama made it clear he wouldn't sign a budget and debt agreement that didn't extend the debt ceiling until after the November 2012 presidential election.
In the meeting, Obama told the leaders that they faced three options — a small deficit reduction plan, a medium plan that would reduce deficits by $2 trillion over 10 years or a big agreement that would shoot for up to $4 trillion in deficit reductions over the next decade. Obama indicated he preferred the largest number.
In the meeting, Boehner and Senate Minority Leader Mitch McConnell of Kentucky backed Obama's bigger, more ambitious goal, said Democratic officials familiar with the talks. Their lieutenants, Senate GOP Whip Jon Kyl of Arizona and House Majority Leader Eric Cantor of Virginia, indicated they believed the medium-size option was more realistic. Both Cantor and Kyl had participated in talks led by Vice President Joe Biden that had already identified about $2 trillion in deficit reduction.
The negotiations are politically difficult for both parties.
Raising the debt ceiling is unpopular with voters, especially those who vote Republican, increasing concern among GOP lawmakers that they could be challenged by fellow Republicans in primaries across the country.
The big entitlement programs such as Social Security, Medicare and Medicaid have long been protected by Democrats in Congress.
Underscoring the political stakes, the Pew Research Center reported Thursday that in a recent poll it found that six of 10 of those surveyed believe it is more important to maintain Social Security and Medicare benefits than to reduce the budget deficit.