Obama warns of "second recession or worse" without debt limit increase, but dodges constitutional question

President Obama answers questions during a "Twitter town hall" on July 6, 2011. CBS

White House, Barack Obama, Twitter
CBS
At his Twitter town hall event Wednesday afternoon, President Obama was asked by "RenegadeNerd" - aka Dexter Smith - "Mr President, will you issue an executive order to raise the debt ceiling pursuant to section 4 of the 14th amendment?"

After joking about RenegadeNerd's picture, Mr. Obama launched into an argument about why the $14.3 billion debt ceiling must be raised before the administration's August 2nd deadline.

In keeping with the spirit of the event, which is designed to reach people who may not be well versed on some of the hot topics in Washington, he began by explaining that Washington has historically financed deficits through the sale of Treasury notes and bonds - and that Congress votes on how much debt Treasury can issue. (Aka the debt limit.)

Mr. Obama went on to say that if congressional Republicans follow through on threats not to raise the debt limit, Treasury will run out of money and be unable to pay its bills. And that, he said, could plunge the U.S. economy back into recession.

"Potentially, the entire world capital markets could decide, 'You know what? The full faith and credit of the United States doesn't mean anything,'" he said. "And so our credit could be downgraded, interest rates could go drastically up, and it could cause a whole new spiral into a second recession or worse. So this is something we shouldn't be toying with."

The president then turned to the actual question, which concerned the argument that the concept of the debt limit itself is unconstitutional, since the relevant section of the 14th Amendment says in part, "The validity of the public debt of the United States, authorized by law...shall not be questioned." There has been an active debate over whether the administration would be within its legal rights to simply go around Congress - which the Constitution also mandates effectively holds the U.S. purse strings - to increase U.S. debt.

As he has in the past, Mr. Obama dodged the question.

"I don't think we should even get to the constitutional issue," he said. "Congress has a responsibility to make sure we pay our bills. We've always paid them in the past. The notion that the U.S. is going to default on its debt is just irresponsible." He went on to predict a deal to raise the debt limit - in exchange for spending cuts (and, Democrats insist, revenue increases) - within weeks.

Later, Mr. Obama was asked if it was a mistake not to get Republicans to agree to a debt ceiling increase as part of December's deal that extended the Bush tax cuts for the wealthy.

The president responded that the question assumed that such a commitment from GOP lawmakers was possible at the time - an assumption he suggested was incorrect both because Republicans knew they would soon have control of the House and because there were already a number of other issues at play.

More from the Twitter town hall:

Obama addresses Tweet to end "war on drugs"
Obama says he didn't realize magnitude of recession at first
Obama says "back to the drawing board" on mortgage help
Obama: Time to for NASA to "revamp" space mission

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