Congress must raise the American national debt ceiling or risk causing another global financial crisis, says U.S. President Barack Obama.
In an interview Tuesday with NBC's Today show, Obama said "the full faith and credit of the United States is the underpinning not only of our way of life, it's also the underpinning of a global financial system. We could actually have a reprise of a financial crisis, if we play this too close to the line. So we're going be working hard over the next month," he said.
But Obama also expressed confidence that Republican leaders want to avoid such a situation and said he expected lawmakers will reach agreement on how to increase the debt limit "in a sensible way."
The government has said it will exceed its $14.3-trillion debt ceiling on Aug. 2.
The administration and Congress are now focused on cutting long-term spending, the price for increasing the government's borrowing authority.
Ethanol tax credits targeted
One proposal for achieving that would have the government eliminate ethanol tax credits that pay the oil industry $5 billion a year.
The U.S. Senate was debating a measure to eliminate the tax credits. A Republican senator from Oklahoma, Tom Coburn, was trying to force a vote on the measure Tuesday. Coburn said they are wasteful subsidies for an industry that no longer needs them.
"The days of placing spending programs in the tax code and giving them holy status are over," Coburn said. "Ethanol is bad economic policy, bad energy policy and bad environmental policy."
Coburn's measure is supported by conservative groups such as the Club for Growth and environmental groups such as the Sierra Club.
The biggest defenders of the subsidies, however, include farm belt conservatives leading the charge for less government.
Ethanol supporters argue that with gasoline prices hovering near $4 US a gallon, it is no time to repeal tax credits that encourage alternative fuels.
http://www.cbc.ca/news/world/story/2011/06/14/obama-debt-ceiling.html
