Fox Business | GOP Lawmakers call on Obama To Stop Debt Ceiling 'Scare Tactics'

GOP lawmakers call on Obama to stop debt ceiling scare tactics
By Andrew Ackerman | Fox Business | July 14, 2011

WASHINGTON -(Dow Jones)- Despite fresh warnings from ratings agencies that they might cut the U.S. credit rating if the government fails to fulfill all its expected obligations, rank-and-file House Republicans and freshman GOP senators insisted Thursday that no default is necessary if the government simply prioritizes its revenue to ensure timely debt-service payments.

A group of 57 House lawmakers wrote President Barack Obama on Thursday, calling on him to clarify that the Treasury will in fact continue making monthly interest payments owed on its national debt even if the $14.29 trillion debt ceiling isn't increased. They also called on Obama to prioritize making payments to military personnel and entitlement program beneficiaries, arguing there will be more than enough revenue to make these payments.

The lawmakers' letter follows comments by Obama this week that he couldn't guarantee that the government would be able to send checks to recipients of Social Security, military pensions and other government programs next month without a debt-ceiling increase. The administration should assure senior citizens, veterans and members of the military that there is money to pay their salaries and benefits, the lawmakers argued.

"We believe it's a scare tactic that does not benefit the negotiations as they continue over the debt ceiling issue," Rep. Robert Aderholt (R., Ala.) said at a press conference Thursday. "This type of political posturing here will only further damage the administration's self-proclaimed admission to have a serious and adult conversation about the debt ceiling and about spending in Washington."

The Treasury says the $14.29 trillion debt cap must be raised by Aug. 2 or the government will run out of cash to pay all its bills. Treasury Secretary Timothy Geithner has warned repeatedly that Republican calls for the U.S. to prioritize payments are unworkable and unwise--and would entail defaults on some obligations.

But Rep. Mike Pompeo (R., Kan.), who also spoke at Thursday's press conference, said Obama should telegraph which individuals will receive their money on time if the debt ceiling isn't raised. He stressed that military officials and Social Security recipients should be at the top of the list.

"There'll be plenty of cash to pay those people," Pompeo said. "He ought to tell them that's what he's gonna do and not use them as the leverage to get something that makes no sense for America."

In a separate letter, all 13 freshman Republican senators said the president's remarks serve only to frighten the elderly. At a press conference announcing the letter, Sen. Ron Johnson (R., Wis.), minimized the importance of the Aug. 2 deadline. He also suggested his support for raising the debt limit is contingent on Congress also passing a constitutional amendment to balance the federal budget.

The letters come despite Moody's Investors Service's announcement Wednesday that it is reviewing the government's top Aaa rating for a possible downgrade, citing the "rising possibility" that the government's borrowing limit won't be raised soon enough to prevent the U.S. from running out of money to pay its bills.

In addition, Standard & Poor's has told lawmakers and top business groups it might cut the U.S. credit rating if the government fails to make any of its expected payments--including Social Security checks--even if it makes all its debt payments, sources have told The Wall Street Journal.

Earlier Thursday, White House Press Secretary Jay Carney said the White House and congressional leaders can agree to about $1.5 trillion in deficit cuts and may be able to agree to an additional $200 billion in cuts.

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