Obama: "The Entire World Is Watching"

Obama East Room

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President Barack Obama addressed the nation on the status of negotiations to raise the debt limit Monday night, saying “the entire world is watching.”Obama devoted most of his speech to calling for both parties to compromise to raise the debt ceiling through the end of 2012.

“The American people may have voted for divided government,” he said, “but they didn’t vote for a dysfunctional government.”

Obama said Democrats and Republicans now agree on the amount of deficit reduction needed. “The debate is about how it should be done,” he said.

He was followed by Speaker of the House John Boehner, who in an unusual move provided a GOP response. Boehner pushed for the GOP plan based on the “Cut, Cap, and Balance” framework, which would require a second vote to raise the debt limit early next year.

Boehner laid the blame of the current impasse on Obama saying the president created a “crisis atmosphere.” He added he was confident that the House and Senate would pass his proposal.

In private however, the Speaker appeared less confident. CBS News quoted Boehner saying “I didn’t sign up for going mano-a-mano with the President of the United States,” when he left the Capitol Monday night.

Meanwhile doubts are building against both plans. Senate Majority Leader Harry Reid said Democrats would not vote for the Boehner plans, as Tea Party Republicans have also indicated their displeasure with the proposal. Boehner called the Reid plan “a bill filled with phony accounting and Washington gimmicks,” as the GOP base is rallying against it.

Yet other than few key differences, the Boehner and Reid plans are remarkably similar — with the only major sticking point is whether there must be a second vote to raise the debt limit early next year.

Democrats and Republicans say they remain committed to raising the debt limit by the August 2nd deadline, and ensuring the government makes good on its obligations.

Read our live blog of Monday’s developments here. Read below for our live blog of the Monday night’s events.

10:41pm | That’s it for our live blog tonight. We’ll be back Tuesday morning with the latest.

10:02pm | It is not clear what is causing the House servers to crash. For what it’s worth, President Obama called on Americans to contact their congresspeople to encourage them to reach a compromise.

9:56pm | Futures markets are falling after the addresses, which didn’t leave anyone hopeful that a deal is near.

9:51pm | House of Representatives servers are down after the dueling Obama-Boehner speeches. The main House.gov website remains up. 

9:38pm | CBS News’ Jill Jackson overheard Speaker of the House John Boehner say this when leaving the Capitol tonight: “I didn’t sign up for going mano-a-mano with the President of the United States”.

9:34pm | White House Senior Advisor David Plouffe on CNN: Plouffe “We need Republicans in House to understand they will get a lot of what they want… but we can’t have a ‘my way or the highway’ approach”.

9:30pm | CNN’s David Gergen says just a few weeks ago these speeches would be welcome in the political discourse, but says this close to the deadline they are only going to further the divide between the two parties.

9:29pm | Boehner mocked Obama’s calls for a “balanced approach,’ saying which “in Washington [it] means: we spend more. . .you pay more.

9:27pm | Boehner was critical of the Reid proposal to raise the debt limit, calling it “a bill filled with phony accounting and Washington gimmicks.

9:25pm | Speaker Boehner struck a combative tone tonight, saying President Obama “created” a crisis atmosphere, while Obama stressed compromise in his address.

9:24pm | That’s it for Speaker Boehner.

9:24pm | Boehner: The solution to this crisis is not complicated: if you’re spending more money than you’re taking in, you need to spend less of it,. 

9:23pm | Boehner: “Obviously, I expect that bill can and will pass the Senate, and be sent to the President for his signature.  If the President signs it, the ‘crisis’ atmosphere he has created will simply disappear.

9:22pm | Boehner: “this week, while the Senate is struggling to pass a bill filled with phony accounting and Washington gimmicks, we will pass another bill – one that was developed with the support of the bipartisan leadership of the U.S. Senate.”

9:22pm | Boehner: “there is no stalemate in Congress.”.

9:21pm | Boehner:
The president is adamant that we cannot make fundamental changes to our entitlement programs.  As the father of two daughters, I know these programs won’t be there for them and their kids unless significant action is taken now.

9:21pm | Boehner:  Even when we thought we might be close on an agreement, the president’s demands changed. .

9:20pm | Boehner plugging “Cut, Cap, and Balance” bill — which even he admits is dead in the Senate.

9:20pm | Boehner:  The American people will not accept an increase in the debt limit without significant spending cuts and reforms.

9:19pm | Boehner goes after key Obama legislative achievements: Here’s what we got for that spending binge: a massive health care bill that most Americans never asked for.  A ‘stimulus’ bill that was more effective in producing material for late-night comedians than it was in producing jobs.  And a national debt that has gotten so out of hand it has sparked a crisis without precedent in my lifetime or yours..

9:19pm | Boehner: Days of spending and debt “are over”

9:18pm | Here is Boehner: “I’m John Boehner.  I serve as Speaker of the whole House — of the members of both parties that you elect.”

9:17pm | While President Obama spend a good chunk of his speech pushing a “balanced approach” he did not say it is a requirement to a deal he will sign. Obama’s only bottom-line now appears to be his demand that the debt ceiling be raised enough to get the nation through the 2012 election.

9:16pm | And that’s it for President Obama. Speaker Boehner expected shortly.

9:15pm | Obama closes: “The entire world is watching.  So let’s seize this moment to show why the United States of America is still the greatest nation on Earth – not just because we can still keep our word and meet our obligations, but because we can still come together as one nation.”

9:14pm | Obama: The American people may have voted for divided government, but they didn’t vote for a dysfunctional government..

9:13pm | Obama: “[Americans are] fed up with a town where compromise has become a dirty word”

9:13pm | Obama: “I have told leaders of both parties that they must come up with a fair compromise in the next few days that can pass both houses of Congress – a compromise I can sign.  And I am confident we can reach this compromise.

9:12pm | Obama: “This is no way to run the greatest country on Earth.”

9:11pm | Obama: “First of all, a six-month extension of the debt ceiling might not be enough to avoid a credit downgrade and the higher interest rates that all Americans would have to pay as a result.”

9:11pm | Obama: The new approach that Speaker Boehner unveiled today, which would temporarily extend the debt ceiling in exchange for spending cuts, would force us to once again face the threat of default just six months from now .

9:09pm | Obama: “Since the 1950s, Congress has always passed it, and every President has signed it.  President Reagan did it 18 times.  George W. Bush did it 7 times.  And we have to do it by next Tuesday, August 2nd, or else we won’t be able to pay all of our bills.”

9:09pm | Obama: “Understand – raising the debt ceiling does not allow Congress to spend more money”.

9:08pm | Obama: “Now, what makes today’s stalemate so dangerous is that it has been tied to something known as the debt ceiling – a term that most people outside of Washington have probably never heard of before”.

9:07pm | Obama continuing to push a “balanced” approach that asks the wealthy to contribute more. Cites President Ronald Reagan.

9:07pm | Obama reiterates he wants a payroll tax break for working families.

9:06pm | Obama: So the debate right now isn’t about whether we need to make tough choices.  Democrats and Republicans agree on the amount of deficit reduction we need.  The debate is about how it should be done.”.

9:05pm | Obama: “The only reason this balanced approach isn’t on its way to becoming law right now is because a significant number of Republicans in Congress are insisting on a cuts-only approach – an approach that doesn’t ask the wealthiest Americans or biggest corporations to contribute anything at all.

9:03pm | Obama describes “grand bargain” proposal, which is for all intents and purposes dead.

9:03pm | Obama: If we stay on the current path, our current debt could do damage to the economy..

9:02pm | Obama begins reiterating the major spending programs that led to the current deficits: wars, stimulus, Bush tax cuts, and the Medicare prescription drug program.

9:01pm | Here is President Obama.

9:00pm | We’re expecting President Obama any moment,. Stay tuned…

8:56pm | Erin Burnett is elaborating on her report that S&P may be partial to the Reid plan. She says that S&P believes that Boehner’s plan does not include enough cuts right away, compared to the Reid plan.

8:55pm | Obama is expected in 5 minutes.

8:52pm | Rep. Paul Ryan (R-WI) is pushing back against Democratic claims that he included savings from the wars in Iraq and Afghanistan. In a statement he called the Reid plan full of gimmicks. Read it here.

8:45pm | Obama is expected to take the podium in 15 minutes. Boehner will begin speaking a few minutes after Obama finishes.

8:42pm | Another excerpt from Obama’s speech: He will warn that the country is facing “imminent threat of default,” if the debt limit isn’t raised.

8:36pm | CNN’s Erin Burnett reported Monday night that S&P may be favouring the Reid plan over the GOP plan because of the size of the cuts. The credit rating agency has been the most vocal about the changes Congress has to make in order for the country to maintain its AAA rating. Burnett added that the cuts need to be closer to $3 trillion — all at once — in any plan to avoid a downgrade. More details here.

8:31pm | A clarification from Boehner Communications Director Kevin Smith: The last speech by a member of the opposition party was in 2009, when Rep. Charles Boustany (R-LA) responded to an Obama address to Congress on health care reform..

8:29pm | Rep. Barney Frank (D-MA) took a shot at 2012 GOP Presidential candidate Michele Bachmann in a statement on the debt ceiling. “Everybody who knows more than Michele Bachmann understands that this is going to cause serious problems,” he said.

8:26pm | New York City Mayor Michael Bloomberg has weighed in on the debt ceiling negotiation stalemate. You can read his full statement here:
Americans are disgusted with the gridlock and lack of compromise, and they have a right to be. There will be no political gains from a prolonged crisis; no one will win. Voters will blame all the incumbents; none of them will benefit. And around the globe, friends are watching this spectacle with amazement and foes are watching it will glee. America is a great nation. It’s time our leaders in Washington start acting that way.”

8:24pm | Obama will channel President Ronald Reagan, saying failure to raise the debt limit will result in “incalculable damage” to the U.S. economy.

8:18pm | From unofficial White House historian and CBS News Correspondent Mark Knoller: The last time an opposition party has responded to a sitting president’s live address — aside from a State of the Union — was September 13, 2007, when Senator Jack Reed (D-RI) responded to a speech by President George W. Bush on the status of the Iraq War.

8:07pm | Republicans are critical of the Reid plan because it includes $1 trillion in war savings, which they don’t consider to be new deficit cuts. Democrats reply that the budget proposed by Rep. Paul Ryan and passed by the House counts the same cuts toward its deficit reduction figure.

8:02pm | It’s worth noting that both the Democratic and Republican deficit reduction plans would include some of the most significant spending cuts in American history.

7:50pm | In case your missed it, one of the more shocking statements of the day came from House Minority Leader Nancy Pelosi, who said “it is clear we must enter an era of austerity.”

7:46pm | A quote from the President’s speech: “With eight days until the deadline, compromise is the only reasonable path ahead to keep our economy strong and growing.”

7:29pm | Speaking on the Senate floor, Reid said all Democrats will vote against the Boehner plan. He encouraged the Senate to take up his proposal, saying there is no need to compromise, “because we have given them everything they’ve asked for.”

7:24pm | Senate Majority Leader Harry Reid has just filed his plan to raise the debt limit, setting the stage for a vote on his proposal mid-week. The Senate will begin debating the bill on Tuesday. Reid did not file cloture on the legislation, meaning a final vote probably won’t occur before Thursday at earliest.

7:21pm | Currently it appears neither the Democratic nor Republican debt limit plans can pass the Senate, POLITICO reports. Already moderates like Sen. Joe Lieberman (I-CT) are lining up saying the Reid package does not cut enough spending.

7:17pm | Cantor acknowledged that the main disagreement between the two parties now is whether there should be a second vote to raise the debt limit early next year. Republicans see the second vote as a way to hold Obama to making steep spending cuts, while Democrats and Obama argue it would create unnecessary uncertainty for the economy.

7:16pm | House Majority Leader Eric Cantor faced tough questions on CNBC’s The Kudlow Report Monday evening on the differences between the Republican and Democratic debt plans. Kudlow asked Cantor: “What’s so bad about the Harry Reid plan? It looks very Republican to me.”

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