Boehner Demands Spending Cuts for Any Debt Limit Increase

Photographer: Andrew Harrer/Bloomberg

Representative John Boehner, a Republican from Ohio and Speaker of the House. Close

Representative John Boehner, a Republican from Ohio and Speaker of the House.

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Photographer: Andrew Harrer/Bloomberg

Representative John Boehner, a Republican from Ohio and Speaker of the House.

House Speaker John Boehner revived Republicans’ insistence that any increase in the nation’s debt limit be matched by at least as much in spending cuts, positioning his party for a renewed standoff with Democrats over the federal budget.

“Allowing the debt ceiling to go up without addressing our fiscal challenge would be the most irresponsible thing that I could do,” Boehner said in a speech yesterday before a conference in Washington sponsored by the Peter G. Peterson Foundation.

Boehner’s demand, which included other changes in the budget, drew fire from Democrats who said Republicans were pushing for a replay of last year’s battle over raising the debt limit. Lawmakers have fought over whether to raise taxes and cut entitlement programs to help close the budget shortfall.

“It is absolutely reckless to threaten that the United States will not pay its bills,” said Representative Chris Van Hollen, the top Democrat on the House Budget Committee, also at the conference. “That is not fiscal discipline -- that is fiscal irresponsibility. We should be coming together to try and find a way out, not drawing lines in the sand.”

Year-End Deadline

Boehner’s comments signal no clear path to resolving a crush of tax-and-spending decisions waiting for lawmakers at the end of this year. Income tax cuts first enacted under President George W. Bush will expire, as will a temporary reduction in the Social Security payroll tax. More than $1 trillion in automatic spending cuts are set to begin taking effect, extended unemployment benefits will run out and the government will brush up against its $16.394 trillion legal cap on borrowing.

Both parties are waiting for the November election before negotiating the issues. Lawmakers of both parties yesterday said they doubt the issues will be resolved in a post-election session of Congress.

“I don’t see that happening,” said House Budget Committee Chairman Paul Ryan, a Wisconsin Republican. Lawmakers may instead use the so-called lame-duck session to create a “framework” in which to make decisions early next year, said Van Hollen of Maryland, who agreed that “it’s hard for me to see how you resolve” the issues by January.

Accounting Maneuvers

Treasury Secretary Timothy Geithner, also speaking at the conference, said his agency can use accounting maneuvers to postpone having to lift the debt cap until next year.

Their comments came at an annual conference of lawmakers and budget experts organized by Peterson, the co-founder of the New York-based private-equity firm Blackstone Group LP (BX), who is an anti-deficit activist.

Lawmakers shouldn’t worry about another battle over the debt limit because it will require them to make difficult and long-delayed budget decisions, said Boehner.

“It’s an action-forcing event in a town that’s become infamous for inaction,” he said. Congress may have to approve multiple debt-limit increases to meet Republicans’ demands for spending cuts, said Boehner.

Senate Majority Leader Harry Reid rejected Boehner’s stance.

“The American people have had enough of this brinksmanship,” said Reid, a Nevada Democrat. “They want us to get things done.”

He called for “a balanced approach for deficit reduction that puts the interest of the middle class ahead of the top 1 percent.”

Corporate Tax Code

House Republicans will vote later this year to create an “expedited process” for overhauling the nation’s individual and corporate tax codes, said Boehner.

“If we do this right, we’ll never have to deal with the uncertainty of expiring tax rates again,” he said.

House Republicans haven’t figured out what the process would look like or how it would be enforced to ensure Congress acts on a tax code overhaul, said Representative Dave Camp, chairman of the tax-writing Ways and Means Committee.

“The real thing he mentioned was some kind of expedited process,” Camp, a Michigan Republican, told reporters in the Capitol today. “There’s 34 different types of those in law now, so we’re going to be reviewing those in the committee.”

Previous negotiations, including last year’s talks on the debt-limit and supercommittee deliberations, included discussion of ways to require congressional action on taxes.

Spending Cuts

Last week, House Republicans voted to cut food stamps and other domestic programs to head off automatic spending cuts scheduled to hit the Defense Department in January.

Former President Bill Clinton, also at the conference, said he supports the deficit-reduction plan written by the heads of President Barack Obama’s debt commission.

The panel’s two chairmen, former Wyoming Senator Alan Simpson, a Republican, and Clinton’s onetime White House Chief of Staff Erskine Bowles, proposed raising taxes and cutting politically sensitive entitlement programs such as Medicare and Social Security.

Budget issues should be central to this year’s presidential campaign, Clinton said, urging Obama to talk more about his proposed cuts to Medicare and the Defense Department.

“Politicians ought to be talking more about the hard issues,” Clinton said. “This budget issue ought to become front and center in the presidential election, in all the debates, in very specific ways.”

To contact the reporter on this story: Brian Faler in Washington at bfaler@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net

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