US News

Now the debt-limit showdown looms

WASHINGTON — After President Obama and Congress climbed down from the fiscal cliff, they headed straight for another budget battle that again threatens economic disaster.

The next fiscal showdown is about two months away, when the United States must raise its debt limit or face default and $1.2 trillion in automatic federal spending cuts that are scheduled to take effect.

Republicans, who accepted tax hikes but didn’t get spending cuts in the fiscal-cliff deal this week, will now use the debt limit to push for them.

“That’s a debate the American people want. It’s the debate we’ll have next. And it’s a debate Republicans are ready for,” Senate GOP leader Mitch McConnell (R-Ky.) said yesterday.

Obama says that he’s ready to negotiate spending cuts, including to Medicare, but refuses to do it in a fight over the debt limit.

“The consequences for the entire global economy would be catastrophic,” Obama warned Tuesday after the fiscal-cliff deal passed Congress. He officially signed the bill last night.