House Republicans Plan Three-Month Debt-Limit Increase
House Republicans revised their strategy for the coming months’ fiscal debate with Democrats, saying they’ll agree to a three-month debt-limit increase without demanding spending cuts as part of the deal.
Instead, Republicans will use the planned Jan. 23 House vote on a debt-ceiling increase to try to force Senate Democrats to adopt a budget to spell out their spending plan.
“We are going to pursue strategies that will obligate the Senate to finally join the House in confronting the government’s spending problem,” Speaker John Boehner of Ohio said in a statement yesterday at the end of House Republicans’ policy retreat at a resort near Williamsburg, Virginia.
The strategy represents an acknowledgment by Republican leaders that they need to reassess their goals following President Barack Obama’s re-election and an increased Democratic majority in the Senate.
The Treasury Department has said the U.S. will exceed its $16.4 trillion borrowing authority sometime from mid-February to early March. Congress faces two other fiscal deadlines in the next 90 days, and House Republicans plan to use those debates -- rather than the immediate one over the debt limit -- to push for federal spending cuts.
Financing for government agencies is scheduled to lapse March 27, and lawmakers must pass new spending or cause a government shutdown. Also in March, Congress will confront the $110 billion in automatic spending cuts, half from defense, that were postponed in the Jan. 1 tax deal.
House Majority Leader Eric Cantor of Virginia said in a statement that Republicans’ plan is to block pay for members of Congress if the House or Senate doesn’t adopt a budget by the end of the proposed debt-limit increase. A leadership aide said Republicans are dropping their insistence that a short-term debt-limit increase be accompanied by a dollar-for-dollar spending cut.
Republicans will continue to seek spending reductions as part of a long-term increase in the debt limit, said the leadership aide, who spoke on condition of anonymity.
President Barack Obama’s spokesman, Jay Carney, said in a statement, “We are encouraged that there are signs that congressional Republicans may back off their insistence on holding our economy hostage to extract drastic cuts” in spending.
“Congress must pay its bills and pass a clean debt limit increase without further delay,” Carney said.
Senate Majority Leader Harry Reid’s spokesman, Adam Jentleson, said in a statement that the House must pass a “clean” debt-limit increase. He didn’t address Cantor’s statement about requiring members of Congress to forfeit their pay if a budget isn’t adopted.
House Democratic leader Nancy Pelosi’s spokesman, Drew Hammill, said in a statement that the proposed three-month debt- limit increase “does not relieve the uncertainty faced by small businesses, the markets and the middle class. This is a gimmick unworthy of the challenges we face.”
Political divisions in Congress pose limits to the ability of Republicans to achieve their long-term goals of deep cuts in spending, Budget Committee Chairman Paul Ryan of Wisconsin told reporters at the retreat two days ago.
Ryan said Republicans want “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.”
The last time the Democratic-led Senate adopted a budget was in April 2009. The Senate and House are supposed to pass budget resolutions early each year to set a spending framework, though there is no enforcement mechanism. Without a budget resolution, appropriations bills allocate money for the federal government.
“No one is talking about default, no one wants to default,” South Carolina Republican Mick Mulvaney, who voted against the 2011 debt-ceiling deal, said in an interview yesterday with Bloomberg Television’s “Capitol Gains” program airing tomorrow. There is a “lot of support growing” among the rank and file for a short-term debt limit, he said.
“If you get a little bit of reform for a little bit of extension” of borrowing authority, that “sounds like a pretty good deal,” Mulvaney said. “If you can figure out a way to get little types of reform, little fixes for small extensions, I don’t find that objectionable.”
Obama has said he won’t negotiate the terms of a debt-limit legislation the way he did in 2011, and he is demanding more tax revenue to accompany further spending cuts. 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.
Louisiana Republican John Fleming said Jan. 17 that passing one or a series of short-term extensions may be effective in 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.”
The debt limit has been raised periodically since its creation in 1917, with Congress increasing or revising it 79 times, including 49 times under Republican presidents, since 1960.
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 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 fell four basis points, or 0.04 percentage point, to 1.84 percent at 5 p.m. yesterday in New York, according to Bloomberg Bond Trader pricing.
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