WASHINGTON – House Republicans plan to vote next week on a three-month extension of U.S. borrowing authority in an effort to force the Democratic-led Senate to adopt a budget 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 Friday at the end of the party’s private policy retreat at a resort near Williamsburg. “The principle is simple: no budget, no pay.”
Majority Leader Eric Cantor of Virginia said in a statement that members of Congress won’t be paid if the House or Senate doesn’t pass a budget by the end of the proposed three-month debt-limit increase.
“This is the first step to get on the right track, reduce our deficit and get focused on creating better living conditions,” Cantor said.
The Treasury Department has said the U.S. will exceed its $16.4 trillion borrowing authority sometime from mid-February to early March. Republicans are seeking a legislative strategy to meet fiscal deadlines that Congress faces in the next 90 days.
Those deadlines include the need to raise the debt ceiling. 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.
Both chambers of Congress should lay out a “framework” of future government spending, Representative Kevin McCarthy said today in an interview with Bloomberg Television’s “Capitol Gains” program airing Sunday.
“You can’t get out of this without passing a budget,” McCarthy of California said.
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 yesterday.
Attaching a requirement that the Senate pass a budget to a short-term debt-limit extension would require Senate Democrats to spell out their spending plans.
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.
Leaders said the tactic of short-term debt-limit increases was used in the 1980s during the presidencies of Ronald Reagan and George H.W. Bush as a prelude to broader agreements on spending cuts.
“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 today with Bloomberg Television. There is a “lot of support growing” among the rank and file for a short-term debt limit, he said.
The comments by Mulvaney and Ryan reflected the new political realities following President Barack Obama’s re- election that are spurring House Republicans to reassess their goals.
“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 told reporters. “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 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.”
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 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 12:43 p.m. in New York, according to Bloomberg Bond Trader pricing.
“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.”