Obama sends warning shot to Republicans on debt-ceiling increase

President Obama on Saturday sent a cautionary note to GOP leaders ahead of the looming debt-ceiling debate, warning the Republicans that anything but a timely hike in the nation's borrowing cap represents a "dangerous game" that threatens the economy both at home and abroad.

In his weekly radio address to the country, Obama urged GOP leaders to support a drama-free increase in the debt limit, and tackle the issues of spending, revenues and entitlements in a separate context.

"As I said earlier this week, one thing I will not compromise over is whether or not Congress should pay the tab for a bill they’ve already racked up," Obama said from Honolulu, Hawaii, where he's vacationing. "If Congress refuses to give the United States the ability to pay its bills on time, the consequences for the entire global economy could be catastrophic.

"The last time Congress threatened this course of action, our entire economy suffered for it," he added, referring to the protracted debt-ceiling debate in 2011. "Our families and our businesses cannot afford that dangerous game again."

The debate over raising the nation's debt ceiling is shaping up to be the next big, partisan fight in a string of high-stakes budget battles that are threatening to consume most of the political oxygen in the early stages of the 113th Congress. The Treasury Department reached its $16.4 trillion debt ceiling on Monday, but the agency has said it can shuffle funds to pay its obligations for roughly two months, setting the stage for a showdown as March approaches.

Behind Obama, the Democrats want a clean debt-ceiling hike without the burden of extraneous budget provisions that could prolong the debate and scare the markets. Republicans, on the other hand, view the debt-ceiling hike as a rare leverage point in their effort to win significant spending cuts from the Democrats.

In the summer of 2011, the GOP won $2.1 trillion in spending reductions in exchange for a debt-ceiling increase of the same amount, and they want this year's package to contain a similar balance.

In a closed-door meeting Friday, House Speaker John BoehnerJohn Andrew BoehnerRift widens between business groups and House GOP Juan Williams: Pelosi shows her power Debt ceiling games endanger US fiscal credibility — again MORE (R-Ohio) told his conference that he'll insist that a debt-limit hike be accompanied by spending cuts, and Senate Minority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellHoyer signals House vote on bill to 'remove' debt limit threat Biden signs bill to raise debt ceiling On The Money — Progressives play hard ball on Biden budget plan MORE (R-Ky.) has sounded a similar note.

“Now that the House and Senate have acted in a bipartisan way to prevent tax increases on 99 percent of the American people, Democrats now have the opportunity — and the responsibility — to join Republicans in a serious effort to reduce Washington’s out-of-control spending,” McConnell said Wednesday.

Obama, meanwhile, says he also wants more spending cuts, just not as a part of the debt-ceiling bill. On Saturday, the president vowed to seek a grand bargain on deficit reduction that includes significant cuts – as the Republicans are demanding – but also new tax revenues.

"I believe we can find more places to cut spending without shortchanging things like education, job training, research and technology all which are critical to our prosperity in a 21st-century economy," Obama said. "But spending cuts must be balanced with more reforms to our tax code. The wealthiest individuals and the biggest corporations shouldn’t be able to take advantage of loopholes and deductions that aren’t available to most Americans."

Obama also hinted at some of the non-fiscal issues he'll be pushing in the new Congress, including thorny matters like climate change, immigration reform and gun policy that foreshadow additional partisan battles this year.

"Fixing our infrastructure and our immigration system, promoting our energy independence while protecting our planet from the harmful effects of climate change, educating our children and shielding them from the horrors of gun violence – these aren’t just things we should do," Obama said. "They’re things we must do."