'We're Not Greece' Says Obama As US Fears Grow

We’re not Greece, says Barack Obama as US fears grow

President Barack Obama on Friday said only "modest adjustments" were required to overhaul the debt-ridden US economy as he insisted the country was not in the same straits as "Greece or Portugal".

By Alex Spillius, Washington
12:40AM BST 16 Jul 2011
23 Comments
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With Standard & Poor's and Moody's, two major ratings agencies, threatening to downgrade America's top credit status, Mr Obama tried to downplay fears about the strength of the world's largest economy, while issuing warnings to Republicans that time was running out to reach a deal on spending and borrowing.

"We are running out of time, that is my main concern, and we simply need to make some tough choices," said Mr Obama.

"But contrary to what people are saying, we are not Greece, we are not Portugal. We have a chance to stabilise America's finances for a decade or 15 years or 20 years if we're willing to seize the moment."

Weeks of negotiations with the opposition on spending and borrowing have led to an impasse, with Mr Obama storming out of a meeting with Republicans this week declaring "enough is enough".

He needs to reach an agreement with Congress, which is partly controlled by Republicans, to raise the US government's $14.3 trillion borrowing limit in order to allow it to continue functioning.

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Failing to reach a deal by Aug 2 would leave the president with an array of unpleasant options, such as not paying pensioners or war veterans, closing courts or cutting student loans.

Ben Bernanke, the chairman of the Federal Reserve, warned that such a failure would be "calamitous".

He said that even if the federal government continued to pay interest to its creditors, principally the Chinese, the inability to make other payments would be a shock to the global financial system.

Votes to raise the debt ceiling are usually fairly routine, but with the anti-spending Tea Party Republicans calling the shots, Republicans have insisted that the government commit to cutting the deficit before they agree to more debt.

To that end, Mr Obama has agreed to cuts but wants Republicans to compromise by ending some tax breaks for wealthier Americans and corporations, which is anathema to most Republicans.

The president insisted the public was on his side in wanting a "balanced approach" that would mix spending cuts and tax increases.

"The American people are sold," he said. "The problem is that members of Congress are dug in ideologically."

Business: Page 39

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