Obama stands firm over debt ceiling and criticises GOP as 'irresponsible'

Barack Obama insisted on Monday that he would not back down this time over the looming debt ceiling battle, and dared Republicans in Congress to shut down the government – a move that would have consequences for people on welfare, troops and others reliant on a regular federal payment.

Speaking at the final White House press conference of his first term as president, Obama described the Republican threat to refuse to raise the debt ceiling as irresponsible and absurd.

He said that he was not going to allow a gun to be held to his head by Republicans as he was in 2011, when the federal government came within days of a shutdown.

"They will not collect a ransom in exchange for not crashing the economy," he said. "The full faith and credit of the United States of America is not a bargaining chip. And they better decide quickly because time is running short."

But Republican leaders in the Senate, and in the House, where the party has a majority, showed no sign of backing down, and were adamant they will not raise the debt ceiling without Obama agreeing to spending cuts to help reduce the country's $16.4tn deficit.

Republicans have said in public and private they are prepared to let the federal government shut down this time unless the Obama administration agrees to substantial cuts in spending.

The Republican leader in the Senate, Mitch McConnell, in a statement issued after Obama's White House press conference, urged the president to get serious.

"I do know that the most important issue confronting the future of our country is our deficit and debt," McConnell said. "So we are hoping for a new seriousness on the part of the president, and we look forward to working with him to do something about this huge, huge problem."

Obama is gambling on having an all-out confrontation with the Republicans early in his second term, rather than seeing the next four years dominated by similar, repeated clashes. If the government shuts down, the president is banking on the Republicans getting most of the blame.

The federal government had to be shut down twice in the mid-90s in battle between congressional Republicans and the Clinton administration.

Raising the debt ceiling is automatic in most developed countries. Without it, the federal government would no longer be able, in theory at least, to pay all its bills. "These are bills we've already racked up and we need to pay them," the president said, emphasising the point that raising the debt ceiling was not authorising new spending.

Obama, warning of the consequences of failing to raise the debt ceiling, said the country would be viewed as a risk by investors overseas, and that there was the added danger of the country going back into recession. "We are not a deadbeat nation," he said.

"It would be a self-inflicted wound on the economy. It would slow down our growth and tip us into recession. To even entertain the idea of this happening is irresponsible. It's absurd."

Answering accusations that part of the problem was that he had not been sociable enough towards Republican members of Congress, he said he did invite them to the White House, but often they did not come, and that even those who did show up did not repay his hospitality when it came to debate and votes.

"I promise you: Michelle and I are very nice to them. We have a wonderful time. But it doesn't stop them from going on the floor of the House and blasting me for being a big-spending socialist," he said.

The Republican leader in the House, speaker John Boehner, echoed McConnell. "The American people do not support raising the debt ceiling without reducing government spending at the same time. The consequences of failing to increase the debt ceiling are real, but so too are the consequences of allowing our spending problem to go unresolved," Boehner said.

Powered by Guardian.co.ukThis article was written by Ewen MacAskill in Washington, for guardian.co.uk on Monday 14th January 2013 19.34 Europe/London

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