Reid Seeks Clean Debt-Limit Increase as Republicans Mull
Senate Majority Leader Harry Reid said Republicans should support his plan to push the next debt-limit fight into 2015 and prevent a potential U.S. default.
Reid introduced a bill yesterday, setting up a test vote for later this week. He’ll need at least six Senate Republicans to let the plan move forward, and at least seven have left open that possibility.
“Business leaders are begging us to do the right thing and to do it now,” Reid said on the Senate floor today. “The time for misleading rhetoric is through and the time for responsible leadership is here.”
Reid spoke on the ninth day of a partial government shutdown and with eight days remaining before U.S. borrowing authority lapses Oct. 17. Lawmakers remain far from an agreement amid continued verbal sparring between President Barack Obama and House Speaker John Boehner.
Obama said yesterday that he could accept a short-term debt-ceiling increase without policy conditions that set the terms for future talks. Boehner rejected the idea of passing a debt-ceiling increase now and negotiating later. He labeled that “unconditional surrender” and instead sought immediate talks with Obama.
A House Republican leadership aide, who didn’t want to be identified discussing private talks, said party leaders won’t agree to a short-term increase in the debt limit unless the measure contains Republican policy priorities.
“If you had a clean debt ceiling increase without any kind of reforms to control spending that would probably lead to another downgrade in our credit ratings,” Representative Steve Scalise, a Louisiana Republican and head of the Republican Study Committee, told reporters today. The group includes lawmakers who advocate for smaller government.
Boehner, an Ohio Republican, spoke on the House floor today to argue for delaying the requirement that individuals purchase health insurance, citing the computer problems that have plagued the federal government’s online health insurance exchange. He spoke after he and Majority Leader Eric Cantor of Virginia met today with the top two Democrats in the House, Nancy Pelosi of California and Steny Hoyer of Maryland.
Pelosi said she urged Boehner to allow a vote on a government funding bill without policy conditions.
“We were disappointed the speaker did not take yes for an answer,” Pelosi said in a statement.
Obama invited House Democrats to the White House today at 4:30 p.m. to discuss the fiscal standoff. He also plans to meet with the other three caucuses in Congress. House Republicans will send their leaders and some committee chairmen, or 18 of their 232 members, to a meeting tomorrow.
The Standard & Poor’s 500 Index (SPX) rose 0.3 percent at 3:17 p.m. in New York, following its biggest two-day decline since June.
Rates on Treasury bills due on Oct. 17 rose 13 basis points to 0.41 percent after jumping 14 basis points yesterday. They were negative as recently as Sept. 26. The benchmark 10-year yield rose three basis points, or 0.03 percentage point, to 2.66 percent at 2:10 p.m. New York time, according to Bloomberg Bond Trader prices.
“The current political deadlock in the United States is needlessly putting at risk the stability and growth not only of the U.S. but also the world economy,” Angel Gurria, the secretary-general of the Organization for Economic Cooperation and Development, said in a statement today. “We still see the probability of failing to raise the debt ceiling as low, but as the government shutdown drags on, the level of concern is ratcheting up.”
At a White House news conference yesterday, the president again insisted that he wouldn’t negotiate under the risk of default or a government shutdown, comparing Republicans to hostage-takers and extortionists.
Obama wouldn’t answer directly when asked if he would make sure that bondholders are paid first if Congress doesn’t act. He said the government was “exploring all contingencies.”
Giving priority to interest payments would prevent the U.S. from defaulting on its debt while requiring the government to balance its budget immediately, an austerity step that House Republicans would impose over 10 years.
The 11 Republicans on the Senate Finance Committee sent a letter to Obama today saying that the president’s warnings about a potential default are “unproductive and misguided.”
The absence of a debt limit increase “doesn’t mean there’s a default,” said Senator Tom Coburn, an Oklahoma Republican. “That means the debt limit hasn’t gone up. They’re two different things,” he said. “There is not going to going to be default. Period.”
Treasury Secretary Jacob J. Lew is scheduled to testify before the Finance panel at 8 a.m. tomorrow in Washington.
Unlike past fiscal feuds, this dispute is more about Republican opposition to the president’s health-care law and less about the amount of spending, though some Republicans are starting to put more emphasis on deficits.
The U.S. budget deficit in June was 4.2 percent of gross domestic product, down from 10.1 percent in February 2010 and the narrowest since November 2008, when Obama was elected to his first term, according to data compiled by Bloomberg from the Treasury Department and the Bureau of Economic Analysis.
The government shutdown started Oct. 1 after Republicans insisted that further funding for many programs must be tied to a one-year delay in the mandate that individuals purchase health insurance.
Obama and Senate Democrats refused, and the resulting furloughs and agency shutdowns have slowed mortgage closings, small-business loans and nutrition assistance to poor mothers. Some programs, such as Social Security, continue uninterrupted.
In Congress this week, the House so far isn’t planning to vote on a bill that would include a debt-ceiling increase. Boehner outlined proposals last month that would tie party priorities to the debt limit before that idea ran into objections from hard-liners who wanted to focus on changing the health law in the shutdown fight.
That inaction shifts attention to the Senate, where Democrats are trying to pass a bill that would put pressure on Boehner as the Oct. 17 deadline draws closer.
Democrats, who control 54 seats in the 100-member chamber, would need the support of at least six Republicans on procedural votes to pass their bill.
The bill would suspend the debt ceiling through Dec. 31, 2014. Because the Treasury Department can use what are called extraordinary measures to stave off default, another increase wouldn’t be needed until sometime in 2015. The previous debt-limit suspension expired on May 18 and the extraordinary measures are lasting five months.
Some Senate Republicans, including Susan Collins of Maine, Saxby Chambliss of Georgia, Lisa Murkowski of Alaska and Lamar Alexander of Tennessee, didn’t rule out backing the Democrats’ plan. They said they must first see details.
One Republican senator -- Mark Kirk of Illinois -- said he would support a “clean” debt-ceiling measure.
The House continued a series of bipartisan votes to fund narrow pieces of the government, including the Food and Drug Administration and military death benefits. The House is now scheduled to be in session on Saturday, Oct. 12.
Obama and Senate Democrats reject the piecemeal approach, saying Republicans shouldn’t get to pick and choose politically popular items.
Jay Carney, the White House press secretary, said the administration expects to have a solution to the death-benefit issue today.
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