President Obama on Monday night urged a "balanced approach" in crafting a deal to raise the debt ceiling, saying a Republican proposal to temporarily extend the debt limit would hurt students, seniors and the middle class by forcing Draconian cuts on government spending.
"That is no way to run the greatest country on Earth. It is a dangerous game we've never played before, and we can't afford to play it now. ... We can't allow the American people to become collateral damage to Washington's political warfare," the president said in a televised address to the nation.
House speaker addresses debt crisis
Obama stepped to the microphones a few hours after first Republicans, then Democrats drafted rival fallback legislation Monday to avert a potentially devastating government default in little more than a week. He said he wants tax increases paired with spending reductions that will put the U.S. debate past the next election and keep the country from defaulting on its loans to creditors, set to come due on Aug. 2.
"The entire world is watching. So let's seize this moment to show why the United States of America is still the greatest nation on Earth," Obama said.
Boehner -- delivering the first such live response aside from the State of the Union in nearly four years -- said Obama was looking for a "blank check" to fund his administration's "spending binge."
He accused Obama of not negotiating in good faith.
"I gave it my all. Unfortunately, the president would not take yes for an answer," Boehner said.
The speaker said Republicans have gotten legislation passed in the House, with some Democratic support, but the president has vowed to veto it.
"Over the last six months, we've done our best to convince the president to partner with us to do something dramatic to change the fiscal trajectory of our country, something that will boost confidence in our economy, renew a measure of faith in our government, and help small businesses get back on track," Boehner said.
Before his speech, Boehner said in passing to House security staff, “I didn’t sign up for going mano-a-mano with the president of the United States.”
Without signed legislation by day's end on Aug. 2, the Treasury will be unable to pay all its bills, possibly triggering an unprecedented default that officials warn could badly harm a national economy struggling to recover from the worst recession in decades.
Boehner has offered a proposal this week that could pass the House and allow Congress to raise the debt ceiling beyond the $14.3 trillion limit authorized by earlier legislation.
The Republican plan aims for about $3 trillion in spending cuts over 10 years but would split the debt increase into two parts. Congress would first vote for a debt-ceiling hike of $900 billion along with spending cuts worth slightly more, teeing up Congress for another vote next year only after a 12-member committee finds another $1.8 trillion in deficit savings. The plan would also require both chambers of Congress to vote on a balanced-budget amendment and cap discretionary spending.
Senate Majority Leader Harry Reid has offered an alternative that would cut $2.7 trillion in spending, using budgeting gimmicks that include about $1 trillion in savings from winding down the wars in Iraq and Afghanistan. It would not increase taxes and the debt ceiling hike would be good until approximately 2013. A Democratic official said Reid has held off introducing it in the Senate to see what happens with Boehner's bill and use his own as a potential lifesaver.
Faced with a choice, the president made clear he backs the Democrats' approach.
"Defaulting on our obligations is a reckless and irresponsible outcome to this debate. And Republican leaders say that they agree we must avoid default. But the new approach that Speaker Boehner unveiled today, which would temporarily extend the debt ceiling in exchange for spending cuts, would force us to once again face the threat of default just six months from now. In other words, it doesn't solve the problem," he said.
However, the president also suggested he's still up for raising taxes.
"The debate right now isn't about whether we need to make tough choices. Democrats and Republicans agree on the amount of deficit reduction we need. The debate is about how it should be done," he said.
"Most Americans, regardless of political party, don't understand how we can ask a senior citizen to pay more for her Medicare before we ask corporate jet owners and oil companies to give up tax breaks that other companies don't get. ... What we're talking about under a balanced approach is asking Americans whose incomes have gone up the most over the last decade -- millionaires and billionaires -- to share in the sacrifice everyone else has to make. And I think these patriotic Americans are willing to pitch in. In fact, over the last few decades, they've pitched in every time we passed a bipartisan deal to reduce the deficit."
House Democratic Leader Nancy Pelosi rallied behind Obama in a statement issued after the speech.
“Democrats stand ready to find a balanced, bipartisan solution, which reduces the deficit, protects the middle class, and Medicare, Social Security and Medicaid beneficiaries," she said. "The Republican plan proposed by Speaker Boehner does not meet this test. Not only does it say that in six months we have to start all over again, it would send a continued message of uncertainty to the markets and risks job creation."
Senate Republican leader Mitch McConnell, meanwhile, urged Obama to shift his position rather than "veto the country into default."
The Associated Press contributed to this report.