Q -- the 14th Amendment?
THE PRESIDENT: Well, I’ll answer that question later. But I just want to make sure that everybody understands defaulting is not an option.
There are some on either side that have suggested that somehow we could manage our way through. But I just want everybody to be clear, the United States government sends out about 70 million checks every month. We have to refinance bonds that we’ve issued, essentially IOUs to investors. We do that every week. If suddenly investors -- and by the way, a lot of those investors are Americans who have Treasury bills, pension funds, et cetera -- if suddenly they started thinking that we might not pay them back on time, at the very least, at the bare minimum, they would charge a much higher interest rate to allow the United States to borrow money.
And if interest rate costs go up for the United States, they're probably going to go up for everybody. So it would be a indirect tax on every single one of you. Your credit card interest rates would go up. Your mortgage interest would go up. Your student loan interest would potentially go up. And, ironically, the costs of servicing our deficit would go up, which means it would actually potentially be worse for our deficit if we had default. It could also plunge us back into the kind of recession that we had back in 2008 and '09. So it is not an option for us to default.
My challenge, then, is I’ve got to get something passed. I’ve got to get 218 votes in the House of Representatives.
Now, the gentleman asked about the 14th Amendment. There is -- there's a provision in our Constitution that speaks to making sure that the United States meets its obligations. And there have been some suggestions that a President could use that language to basically ignore this debt ceiling rule, which is a statutory rule. It’s not a constitutional rule. I have talked to my lawyers. They do not -- they are not persuaded that that is a winning argument. So the challenge for me is to make sure that we do not default, but to do so in a way that is as balanced as possible and gets us at least a down payment on solving this problem.
Now, we’re not going to solve the entire debt and deficit in the next 10 days. So there’s still going to be more work to do after this. And what we’re doing is to try to make sure that any deal that we strike protects our core commitments to Medicare and Medicaid recipients, to senior citizens, to veterans. We want to make sure that student loans remain affordable. We want to make sure that poor kids can still get a checkup, that food stamps are still available for folks who are desperately in need. We want to make sure that unemployment insurance continues for those who are out there looking for work.
So there are going to be a certain set of equities that we’re not willing to sacrifice. And I’ve said we have to have revenue as part of the package.
But I’m sympathetic to your view that this would be easier if I could do this entirely on my own. (Laughter.) It would mean all these conversations I’ve had over the last three weeks I could have been spending time with Malia and Sasha instead. But that’s not how our democracy works. And as I said, Americans made a decision about divided government. I’m going to be making the case as to why I think we’ve got a better vision for the country. In the meantime, we’ve got a responsibility to do our job.
But it was an excellent question. Thank you. (Applause.)
Wednesday, July 27, 2011
Obama Answered the 14th Amendment Question in Maryland
There are a lot of rumblings that Obama can bypass Congress and raise the debt ceiling via the 14th Amendment. Obama told a town hall in Maryland last week that his legal advisers said using the 14th Amendment would be a tough argument to make: