Obama: Time to 'seize the moment' on debt and deficits

Washington (CNN) -- President Barack Obama, making his push for a debt reduction plan that includes tax hikes and spending cuts, said Friday Republicans should listen to voters, whom he said support such a move.
"At what point do the folks over there start listening to the people who put them in office?" Obama said at a news conference. "Now is a good time."
The president called on congressional leaders to "seize the moment" and stabilize America's finances by agreeing to a grand compromise that would include entitlement reform and higher taxes on wealthier Americans.
Obama said congressional leaders have expressed a desire to make sure the United States doesn't default on its obligations. "That is a good thing," Obama said.
"This is not some abstract issue," he warned. "Congress has run up the credit card" and now the bills must be paid, he said.
The president acknowledged that many Republicans have resisted his plan and said he expects many to vote on proposals next week simply "to make political statements."
"I am still pushing for us to achieve a big deal. If we can't do the biggest deal possible, let's still be ambitious. Let's still get a down payment on deficit reduction."
A third option is to raise the debt ceiling but do nothing else, Obama said, but then the problem "will still plague us for months and years to come."
The president warned that the GOP's "cut, cap, and balance" plan would require cutting Medicare and Social Security "substantially."
Obama dismissed the GOP's call for a balanced budget amendment, saying political leaders don't need a constitutional amendment to "do our jobs."
Top House Republicans blasted Obama earlier Friday for failing to produce what they consider to be a legitimate spending cut plan in the debt ceiling talks -- a sign of continued frustration with the pace of negotiations.
The Republicans said they intend to move forward with a vote next week with the "cut, cap, and balance" plan -- a blueprint to significantly cut spending, cap future expenditures and amend the Constitution to require a balanced budget in the future.
"No one wants the United States to default on our obligations," said House Speaker John Boehner, R-Ohio. But "it's time for Democrats to get serious."
The plan, favored by tea party conservatives, has virtually no chance of passing Congress.
The president told congressional leaders Thursday he expected them to consult with their respective caucuses and find agreement over the next 24 to 36 hours on how to proceed.
The negotiations, reflecting core ideological principles on taxes and the size of government, have become a race against the clock. Administration officials have warned that a failure to raise the current $14.3 trillion debt ceiling by August 2 could trigger a partial default.
If Washington lacks the money to pay its bills, interest rates could skyrocket and the value of the dollar could decline, among other things.
Talks between top Democrats and Republicans over the last five days have failed to produce a concrete deal. Obama suggested Thursday that a sixth meeting could be held this weekend if sufficient progress isn't made, according to a Republican aide familiar with the latest negotiations.
On Friday, Obama repeated his desire to close corporate tax loopholes on oil companies and jet owners.
He said that budget negotiators have discussed means testing for entitlement programs. Obama said he is willing to consider changes that affect future generations, but not current beneficiaries.
The president said he is not willing to "voucherize" programs like Medicare -- something Democrats say House Republicans have proposed.
White House Press Secretary Jay Carney has said negotiators will have to shift their focus solely to increasing the debt ceiling if they fail to make significant progress by the end of the week on a larger deal cutting spending and raising taxes.
he president, however, made it clear at Thursday's gathering that he opposes a short-term deal -- an option being promoted by House Majority Leader Eric Cantor, R-Virginia -- and still wants a package that trims the federal deficit by $4 trillion over roughly the next decade, a Democrat familiar with the talks told CNN.
Administration officials also discussed extending and possibly expanding the payroll tax cut -- a nod to sagging employment figures -- as well as extending unemployment insurance, the Democrat said.
The seriousness of the situation was reinforced Thursday when a major credit rating agency, Standard and Poor's, said it was placing the United States' sovereign rating on "CreditWatch with negative implications."
"Owing to the dynamics of the political debate on the debt ceiling, there is at least a one-in-two likelihood that we could lower the long-term rating on the U.S. within the next 90 days," Standard and Poor's said in a statement.
Moody's Investors Services -- another major rating agency -- said Wednesday it would put the sterling bond rating of the United States on review for possible downgrade.
A default "would be a calamitous outcome," Federal Reserve Chairman Ben Bernanke told members of the Senate Banking Committee on Thursday. "It would create a very severe financial shock that would have effects not only on the U.S. economy but the global economy."
Treasury Secretary Timothy Geithner has told negotiators that the world financial markets' concerns are twofold: The debt ceiling must be raised, and leaders must put in place a plan to deal with the deficit and debt, according to the Republican aide.
Obama warned this week he could not guarantee that older Americans will receive their Social Security checks next month if a deal is not reached. GOP leaders accused the president of using scare tactics.
Meanwhile Boehner reiterated his concern Thursday that nothing the administration is offering will resolve the country's long-term debt problem, the Republican aide added. Republicans have tied their support for a debt ceiling increase to deep spending cuts and reforms to entitlement programs.
Obama has said he agrees with the need for entitlement reform, but vehemently disagrees with GOP opposition to tax increases on the wealthiest Americans.
Part of the Democratic message Thursday was that a few Republicans spurred by the conservative tea party movement were preventing the possibility of a major agreement.
Wednesday's negotiations reportedly ended on a tense note between Obama and Cantor. Obama said the extended political wrangling confirmed what the public considers to be the worst of Washington, according to Democratic sources familiar with the talks who spoke on condition of not being identified.
For his part, Boehner downplayed reports of a split between himself and Cantor. Analysts have speculated that Cantor, viewed in some circles as more conservative than Boehner, may be using the crisis to undermine GOP support for the speaker.
"We're in the foxhole" together, Boehner told reporters Thursday. "I'm glad Eric's there."
One of the issues at heart of the current debate is Obama's call for more tax revenue by allowing tax cuts from the Bush presidency to expire at the end of 2012 for families making more than $250,000. His plan would keep the lower tax rates for Americans who earn less.
Obama noted earlier this week he is not looking to raise any taxes until 2013 or later. In exchange, the president said, he wants to ensure that the current progressive nature of the tax code is maintained, with higher-income Americans assessed higher tax rates.
Republicans continue to insist any move to hike any taxes would be economically disastrous.
GOP resistance is a bedrock principle pushed by conservative crusader Grover Norquist against any kind of tax increase. A pledge pushed by Norquist's group, Americans for Tax Reform, has been signed by more than 230 House members and 40 senators, almost all of them Republicans.
Senate Majority Leader Harry Reid, D-Nevada, confirmed Thursday that he and McConnell are working on a possible debt ceiling measure that could come up in the event the broader negotiations fail to reach agreement. It is based in part on a plan McConnell unveiled this week that would set up three short-term increases in the debt ceiling while at the same time registering the disapproval of Congress for such a move.

McConnell's proposal would give Obama power to raise the debt ceiling by a total of $2.5 trillion, but also would require three congressional votes on the issue before the 2012 general election.

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