Congressional Republicans will worsen the economic inequality that persists five years after the financial crisis if they refuse to compromise on budget issues and threaten to shut down the government, President Barack Obama and his aides said in interviews yesterday.
The remarks marked the beginning of an effort to pivot to budget negotiations with Congress after weeks of focus on Syria and its alleged use of chemical weapons.
The president has scheduled a speech in the White House Rose Garden today to mark the fifth anniversary of the collapse of Lehman Brothers Holdings Inc. and talk about the economic gains made since then. He’s also planning a series of speeches and interviews with economic themes throughout the week.
“There’s no serious economist out there that would suggest that if you took the Republican agenda of slashing education further, slashing research and development further, slashing investments in infrastructure further, that that would reverse some of these trends of inequality,” Obama said in an appearance on ABC’s “This Week” that was taped Friday and aired yesterday.
Lawmakers must meet multiple deadlines to avoid a government shutdown on Oct. 1, the start of a new fiscal year, or risk a default on government debt as early as mid-October.
Some Republicans are pressing to rescind money for implementing Obama’s health-care law, a step the administration has said the president would veto. Lawmakers are also $91 billion apart in approving bills to fund the government after Oct. 1, with no compromise in sight.
Representative Tom Price, the Georgia Republican who is vice chairman of the House Budget Committee, blamed Obama for the brewing standoff in an interview on “Fox News Sunday.”
“The president is the individual who’s talking about shutting down the government,” Price said. “The Democrats in the House and the Senate are the individuals that are talking about shutting down the government. We want to fund the government and protect the American people from a destructive law as it relates to health care.”
The anniversary of the Sept. 15, 2008, Lehman Brothers bankruptcy filing is a reminder that a budget stalemate could threaten the economy, Gene Sperling, director of the National Economic Council, said yesterday on a conference call with reporters. Sperling released a report largely crediting Obama for the financial recovery since the crisis.
“The worst thing would be to go backwards due to a self-inflicted wound due to an unnecessary threatening of default,” he said.
Obama said he is unwilling to negotiate on the debt limit.
“If we continue to set a precedent in which a president is in a situation in which each time the United States is called upon to pay its bills, the other party can simply sit there and say, ‘Well, we’re not going to pay the bills unless you give us what we want,’ that changes the constitutional structure of this government entirely,” Obama said on “This Week.”
The Lehman Brothers bankruptcy helped trigger a global financial crisis and deepened an economic recession that became the worst since the Great Depression. It was followed by a plunge in the U.S. stock market and a $182 billion government bailout of the insurer American International Group Inc. (AIG)
The government intervened in the banking, insurance and auto industries as it revamped financial regulations. Obama proposed and Congress passed an $831 billion economic stimulus package.
The Standard & Poor’s 500 Index plunged 46 percent from the last trading day before the Lehman Brothers bankruptcy to a closing low of 676.53 on March 9, 2009.
Unemployment (USURTOT) rates surged to 10 percent as the economy lost 8.7 million jobs between January 2008 and February 2010. Five years after the crash, the country hasn’t recovered all the jobs it lost and the unemployment rate stood at 7.3 percent in August.
Since then, the economy has made gains, including the creation of 7.5 million private-sector jobs.
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