Pomp gives way to fiscal circumstance, as President Obama and Congress get back to work on increasing America’s borrowing limit.
President Obama begins his second term under the gaze of Speaker Boehner
After a day of Inaugural high ceremony, US politicians are turning their attention to the urgent need to reach a deal on raising the government’s debt ceiling and thereby avoid the risk of a disastrous default.
Congress must agree by the end of February to increase the limit on how much the nation can borrow so the government can service its debt.
President Obama has vowed he would not bargain over the debt limit and his inaugural speech showed he believes he has the upper hand.
“We must make the hard choices to reduce the cost of health care and the size of our deficit. But we reject the belief that America must choose between caring for the generation that built this country and investing in the generation that will build its future,” he said.
“The commitments we make to each other – through Medicare, and Medicaid, and Social Security – these things do not sap our initiative; they strengthen us. They do not make us a nation of takers; they free us to take the risks that make this country great.”
If Congress fails to agree a deal, the country could default on obligations like payments to bondholders by as early as February 15.
That would deal a heavy blow to global financial markets and undermine confidence in the world’s largest economy.
However, Republicans do appear ready to raise the debt ceiling temporarily and have also backed away from their insistence on deep spending concessions in exchange for a deal.
House leaders have unveiled legislation to permit the government to continue borrowing money until May 18. It is slated for a vote on Wednesday.
The current debt limit is $16.4trn (£10.3trn), and while the proposed legislation does not set a specific limit, it would allow sufficient automatic increases to stave off a default.