House Speaker John Boehner signaled a clash with the White House and the Democratic-led Senate over raising the U.S. borrowing authority later this year.
“We’re not going to raise the debt ceiling without real cuts in spending,” Boehner, an Ohio Republican, told reporters in Washington today.
President Barack Obama and Senate leaders have said they wouldn’t accept anything short of a clean debt-limit increase.
Senate Majority Leader Harry Reid, a Nevada Democrat, said July 18 that Democrats are “not going to compromise on the debt ceiling.”
Congress should pass a debt-ceiling increase without any “high jinks” to ensure a stable economy, Senator Chuck Schumer, a New York Democrat, told reporters the same day. “Attaching other issues to the debt ceiling is playing with fire,” he said.
Boehner said today that Congress needs to find “significant cuts” in spending to replace $1.2 trillion in across-the-board spending cuts over nine years that took effect starting March 1.
In addition to spending cuts, Republicans say they’re determined to make changes to entitlement programs such as Medicare, Medicaid and Social Security.
Republican leaders have also weighed whether to spell out the steps and timing of a tax-code rewrite as a trigger for raising the borrowing limit. Their goal is to curb tax breaks and use the resulting revenue to lower rates. House leaders have yet to provide details of their strategy.
In 2011, lawmakers fought for months over raising the nation’s debt limit. Obama signed a debt-limit increase into law on Aug. 2, 2011, the day the Treasury Department warned that U.S. borrowing authority would expire. The bitter negotiations led to the Budget Control Act of 2011, which set discretionary spending caps for 10 years and created a process that resulted in the automatic spending cuts known as sequestration. The cuts started in March.
Congress voted at the end of January to suspend the nation’s debt limit until May 19, temporarily removing the risk of a default. When the ceiling was restored May 19, it increased to $16.7 trillion to reflect the government’s borrowing during the past few months.
By shifting money among government accounts, the Treasury Department can continue borrowing for several months, perhaps as late as October or November.
In May, House Republicans voted to exempt federal payments to creditors from the U.S. debt limit. The House measure would ensure that U.S. government bondholders will continue to be paid and that Social Security benefits won’t be interrupted if a standoff over the nation’s debt limit causes a cash crunch. The Obama administration would be left to decide which of the government’s other bills to pay using tax revenue.
The Senate never took up the measure.
© Copyright 2014 Bloomberg News. All rights reserved.