April 13 (Bloomberg) -- Senator Richard Durbin of Illinois, the Senate’s second-ranking Democrat, said a vote by Congress to increase the nation’s legal borrowing limit is contingent on approval of a longer-term budget plan to reduce the debt.
“It’s all wrapped up in the same package,” Durbin said, noting that Republicans have said they won’t back the increase without an agreement on steps to cut deficits and bring down the debt.
Some form of debt-trimming budget blueprint must be approved before Congress will act to raise the $14.3 trillion debt ceiling, Durbin said at the Bloomberg Breakfast today in Washington. “The two are wedded,” said Durbin, his party’s chief vote-counter in the Senate.
House Speaker John Boehner, an Ohio Republican, said President Barack Obama expressed openness to such an approach today at the White House -- a break from the administration’s recent assertions, including as recently as yesterday, that the two issues are separate.
“We’ve made it clear to the president -- and I think the president’s pretty serious about this as well -- that we’ve got to take meaningful steps toward solving our long-term debt problem if, in fact, we’re going to find the votes to increase the debt ceiling,” Boehner told reporters after meeting with Obama and other congressional leaders for a preview of the president’s speech on reducing the long-term debt.
The president today outlined a plan to bring down the nation’s debt through cuts in entitlement and other spending and through tax increases on high earners.
Durbin, a member of a bipartisan group of senators working to craft its own deficit-slashing proposal, said the plan won’t be ready before early May -- about two weeks before, the Treasury Department has told Congress, the government is projected to reach the debt limit. He said lawmakers should act well before the early-July deadline when the Treasury says it will run out of options for avoiding default.
“Even the threat of default on our debt is going to have an impact on our economy, and I don’t think we have the luxury of playing this out like” the debate over 2011 spending cuts, which brought the government to within hours of a shutdown April 8, Durbin said.
While the so-called Gang of Six is working on “a set of goals and a process” for cutting deficits, Durbin said the group -- led by Democratic Senator Mark Warner of Virginia and Saxby Chambliss of Georgia -- is stuck on important details.
“We still haven’t reached agreement on key elements, and some of them are very contentious,” Durbin said.
Durbin declined to give specifics on proposals under discussion by the Gang of Six, though he said the proposal by the co-chairmen of Obama’s fiscal commission “has become a template for the conversation.”
The plan offered late last year by co-chairmen Erskine Bowles and Alan Simpson would save $3.8 trillion over a decade through a mix of entitlement cuts and tax increases. They failed to get enough votes on the commission to forward the proposal to Congress for a vote.
Durbin said the Gang of Six is considering changes to Social Security to ensure its long-term solvency -- something many Democrats, including Majority Leader Harry Reid of Nevada, have said should be omitted from deficit-cutting discussions.
Social Security Changes
“I think we have a reasonable way to deal with it,” Durbin said, describing the approach as “different” than the debt commission’s proposal, “but not different in terms of in what we want to achieve.” The Bowles-Simpson proposal was to slow future benefit growth, particularly for higher earners, and raise the retirement age to 68 by 2050.
“We know how volatile this issue is,” Durbin added.
For now, Durbin said, Republicans have the upper hand in setting the terms of the fiscal debate, based on the closely divided Senate, where his party has a 53-47 working majority.
Republicans have strong party discipline and an influential Tea Party strain that makes it more likely, he said, that they would be able to persuade 13 Democrats to side with them on budget issues than that his party would be able to win over seven Republicans to enact its agenda.
“I don’t see a great scenario for the left in terms of creating or reviving programs” amid record deficits, Durbin said.
Still, the Illinois Democrat said his party will have “plenty to talk about” when it comes to drawing contrasts with Republicans such as Representative Paul Ryan of Wisconsin, the House Budget Committee chairman, who has proposed steep spending cuts in a blueprint that would privatize Medicare and cap Medicaid.
“This is going to be the centerpiece of our conversation with the American people,” Durbin said. What Ryan “will do ultimately to Medicare is to change it so dramatically and increase the cost for seniors so dramatically that he threatens its existence.”
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