Jan. 18 (Bloomberg) -- U.S. House Republicans are weighing a short-term extension of the government’s borrowing authority as a way to spur President Barack Obama into negotiations on deeper spending cuts to entitlement programs.
The new tactic was the subject of private meetings House Republicans held yesterday during their retreat at a golf resort outside Williamsburg, Virginia. The lawmakers there are seeking a legislative strategy to meet a series of fiscal deadlines that Congress faces in the next 90 days.
Those deadlines include the need to raise the country’s $16.4 trillion debt ceiling next month. Congress will also confront in March the $110 billion in automatic spending cuts, half from defense, that were put off in the Jan. 1 tax deal. On March 27, a short-term measure that funds government agencies will also lapse, creating another potential fight.
“We are discussing the possible virtue of a short-term debt-limit extension so that we have a better chance of getting the Senate and White House involved in discussions in March,” Representative Paul Ryan of Wisconsin said. “What we want to achieve at the end of the day is a two-way discussion between Democrats and Republicans and out of that hopefully some progress being made on getting this deficit and debt under control.”
Political divisions in Congress pose limits to the ability of Republicans to achieve their long-term goals of deep cuts in spending, Ryan, the House Budget Committee chairman, told reporters at the retreat.
“While we aspire to give the country a very specific and clear vision of what we think is the right way to go,” Republicans must “recognize the divided-government moment that we have and the fiscal deadlines that are approaching,” Ryan said at his first news conference since returning to Congress after an unsuccessful campaign for vice president last year.
He declined to say how long an extension might last.
“All options are on the table as far as we are concerned,” Ryan said when pressed by reporters for details. Out of those discussions, Republicans “hope to achieve consensus on a plan to proceed so we can make progress on controlling deficits and debt.”
Louisiana Republican John Fleming said lawmakers discussed the possibility of enacting a series of three-month extensions of a debt-limit increase to try to push Obama into talks with Congress on spending cuts.
Leaders recounted how the tactic was used in the 1980s during the presidencies of Ronald Reagan and George H.W. Bush as a prelude to larger agreements on spending cuts, he said.
Obama has vowed not to negotiate the terms of any debt-limit legislation the way he did in 2011. House Speaker John Boehner, an Ohio Republican, has said that any increase in the debt ceiling would have to be accompanied by commensurate spending cuts.
Passing one or a series of short-term extensions may prove effective at persuading Obama to discuss spending cuts because “he can’t get onto other agendas that he sees as important like immigration and gun violence while we are still wrangling every three months on debt ceilings,” Fleming said.
Fleming stressed that no decisions have been made on how to proceed. Members of his party have “no interest” in shutting down the government. Still, he added, “Republicans would have a real problem giving the president a clean debt ceiling,” even on a short-term basis.
“Just like we got the tax increase off the table so we can move on, Obama is going to need to get spending cuts off the table so he can move on to what he favors,” Fleming said.
Although the debt limit has been periodically raised since its creation in 1917 -- with Congress increasing or revising it 79 times, including 49 times under Republican presidents, since 1960 -- Republicans are girding for a fight with Obama and Senate Democrats over tying an increase to spending reductions.
The Treasury Department has said that it expects to run out of emergency measures to prevent a breach of the current debt limit between mid-February and early March.
Investors in U.S. Treasury bonds, who most directly bear the risk of a government default, haven’t shown any alarm.
The last time Congress fought over raising the ceiling, Obama signed an increase on Aug. 2, 2011, the day the Treasury Department warned that U.S. borrowing authority would expire. Standard & Poor’s cut the nation’s credit rating. Still, yields on 10-year U.S. Treasury notes declined to 2.56 percent on Aug. 5 and have continued to drop. The yield rose six basis points, or 0.06 percentage point, to 1.88 percent yesterday in New York.
“The worst thing for the economy is for this Congress and this administration to do nothing to get our debt and deficits under control,” Ryan said yesterday. “We think the worst thing for the economy is to move past these events that are occurring with no progress made in the debt and deficit.”
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