Senate Budget Chief Sees Republican Yield on Debt Lifting

Republicans seeking to curb President Barack Obama’s health-care law probably will capitulate to demands from Democrats to enact a “clean” bill raising the nation’s debt ceiling, the Senate’s top Democratic budget writer said.

“I see no deals on the debt ceiling,” Senator Patty Murray of Washington state, who leads the Budget Committee, said in an interview on Bloomberg Television’s “Political Capital with Al Hunt” airing this weekend.

“The downside of not paying our bills is our credit-rating tanks,” Murray said. “That affects every family, every business, every community. It affects Main Street. It affects Wall Street.”

Murray said she also expects Republicans to relent on their demands for stripping spending from Obama’s health plan as part of action on a spending bill needed to keep the government running after Sept. 30.

Republicans led by House Speaker John Boehner of Ohio have clashed with Obama over the debt ceiling, with the lawmakers demanding changes to spending programs as a condition of raising the $16.7 trillion federal borrowing limit.

Republicans “will come together with some mishmash policy of everything in the bag they’ve ever promised” to anti-tax Tea Party activists, though “they haven’t been able to get the votes for anything yet,” said Murray, 62, fourth-ranking Democrat in the Senate’s leadership.

Federal Reserve

As Federal Reserve Chairman Ben S. Bernanke nears the end of his second term in January, Murray said there’s “a very good chance” that Obama will nominate Fed vice chairman Janet Yellen to succeed him.

Yellen is “very experienced” and “certainly understands that we need to create jobs, the kind of economic climate that brings stability to families in my home state and across the country,” Murray said.

Yellen also would be a “historic choice,” as the first woman to lead the U.S. central bank, Murray said.

Yellen became the front-runner to lead the Fed after Larry Summers withdrew from consideration Sept. 15 amid opposition from some Democratic senators. Murray was among the one-third of the 54-member Senate Democratic caucus who signed a July letter urging Obama to appoint Yellen as Bernanke’s successor.

The Senate will have to confirm Obama’s nominee.

Republicans led by Boehner have said they won’t negotiate with Obama over raising the debt ceiling. The House will act on a debt-ceiling measure that would also reduce the deficit, promote growth and delay Obama’s health-care law by one year, Boehner said at a press conference yesterday.

Reduce Deficit

“If you’re going to raise the debt ceiling, you should work to reduce the deficit and grow the economy at the same time,” Boehner said.

The House plans to vote today on the stopgap spending bill that would finance federal government operations through Dec. 15 while denying money for the president’s health-care overhaul. Senate Majority Leader Harry Reid has called that plan “dead on arrival.”

Obama would veto the bill because the legislation “advances a narrow ideological agenda that threatens our economy,” the president’s Office of Management and Budget said yesterday in a statement of administration policy.

The Democratic-run Senate won’t pass any bill curbing Obama’s top domestic policy achievement, Murray said.

‘Helping Millions’

Republicans are demanding to repeal a health-care law “that is already in place, that’s been upheld by the Supreme Court and is helping millions of Americans,” she said.

Treasury Secretary Jacob J. Lew told Congress in a letter last month that lawmakers need to raise the borrowing limit by mid-October to remove the threat of a government default.

A government shutdown and a failure to raise the debt limit “could have very serious consequences for the financial markets and for the economy,” Bernanke said Sept. 18 as he announced that the Federal Open Market Committee wouldn’t reduce the $85 billion pace of its monthly securities buying.

Bernanke “sees what I see right now,” Murray said, that the economy “is starting to get stable again, but there’s a lot of uncertainty around it.”

To contact the reporter on this story: Greg Giroux in Washington at ggiroux@bloomberg.net

To contact the editor responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.