Republicans Need ‘Glide Path’ to Raise Debt Limit, Coburn Says
Republican Senator Tom Coburn said the budget battle that brought the government to the brink of shutting down this week is far less important than resolving the partisan fight over raising the nation’s $14.3 trillion debt ceiling this summer.
“You’re not going to have the first Republican vote for that until we have a plan that puts this country on a glide path to solving its problems,” the Oklahoma lawmaker said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend.
Coburn, who is in bipartisan talks with five other senators over a longer-term debt-reduction plan, said it isn’t clear whether his group -- dubbed the “Gang of Six” -- can agree on a proposal that could be the basis for that debate. Treasury Secretary Timothy Geithner told Congress this week the debt limit will be reached no later than May 16, although Coburn said Geithner can find ways to extend that to as late as July 4.
Turning to other matters, the second-term senator spoke about his unusual friendship with President Barack Obama, which began when Coburn, an obstetrician from Oklahoma, and Obama, an Illinois Democrat and lawyer, were freshman senators in 2005.
“He’s a very neat man,” Coburn, 63, said. “I don’t want him to be president, but I still love him.”
Coburn said he and Obama, 49, are “polar opposites” and “see things from a different perspective.”
“That doesn’t make him a bad man,” Coburn said, adding that you “can’t change anybody” if you don’t embrace them.
Killing Ethanol Tax
On taxes and spending, Coburn said he’s confident that eventually he’ll succeed in getting Senate approval for a vote to end a tax credit for ethanol to a vote on the Senate floor.
Coburn, who has been dubbed “Dr. No” by Senate colleagues because of his willingness to hold up legislation he says wastes taxpayer money, wants to attach his ethanol proposal to a small- business measure pending in the Senate. Some farm-state Republicans oppose the plan and are blocking a vote.
Coburn said his proposal to eliminate a 45-cent-per-gallon tax credit for ethanol may not get a vote on the small-business bill, but will someday.
“I will eventually get a vote on this, and, yes, I will win,” Coburn said.
Coburn also said he disagrees with some signals that there’s little concern in bond markets about the nation’s fiscal standing. The cost of short-term borrowing is less than it has been in years, suggesting a lack of worry about inflation.
Coburn said he sees things differently.
“When you see bonds go down in price nine days in a row, the signal has been sent that people lack confidence and that we’re going to see an increase in interest rates,” he said. “For every 1 percent increase in interest rates, we’re going to spend $150 billion, which complicates the very problem that we’re having discussions about today” between the president and congressional leaders.
He also said he’s concerned that the Federal Reserve’s purchase of Treasuries is “debasing the currency, which will result in significant inflation.”
The difference between yields on 10-year notes and Treasury Inflation Protected Securities, a gauge of traders’ expectations for consumer prices over the life of the debt, widened to as much as 2.66 percentage points, the most since March 2008. The measure, known as the 10-year break-even rate, was at 2.74 percent in 2006.
A bond-market gauge of inflation expectations the Federal Reserve uses to help determine monetary policy, the 5-year forward inflation rate, increased to 3.01 percentage points, the most since March 8. The measure has averaged 2.8 percent over the past five years.
On the debt-reduction talks, Coburn said the group has been challenged by “hard issues” and declined to provide details.
Some members of the group, led by Democratic Senator Mark Warner of Virginia and Republican Senator Saxby Chambliss of Georgia, were on Obama’s bipartisan debt-reduction commission. The panel rejected a $3.8 trillion budget-cutting plan Coburn supported that included tax increases and changes to programs like Social Security. Coburn said he can’t say whether that plan can form the basis for a bipartisan proposal.
“I don’t know the answer to it,” Coburn said.
Coburn said that Obama “was happy to see my vote” for that debt-reduction plan. “He’s always knocking me because I won’t give him enough votes,” Coburn said. “I mean, he always chides me on it.”
He said the relationship between the two could be an example to others in Washington’s power structure.
“He is our president,” Coburn said. “He’s my president. And I disagree with him adamantly on 95 percent of the issues, but that doesn’t mean I can’t have a great relationship. And that’s a model people ought to follow.”
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