Hello, Debt Limit: Geithner Plans ‘Extraordinary Measures’
One more thing weighing on the year-end fiscal cliff as last-ditch talks begin. Also read: House Likely to Offer Amendments to Any Senate Cliff Deal
December 28, 2012 - 11:42 am
The last time the Obama administration notified Congress about approaching the debt ceiling, Republicans told the White House that unless the administration agreed to major spending cuts, Congress would not agree to raise the limit. The resulting debt standoff led to the Budget Control Act of 2011– a temporary fix that raised the debt limit last year in exchange for spending cuts. The stalemate also led one of the major credit rating agencies to downgrade the U.S. government’s credit rating for the first time in its history.
The Budget Control Act contained a provision to ensure that Congress would meet the obligatory deficit reduction targets by slashing spending by $1.2 trillion over 10 years starting January 1, 2013, which along with the expiring tax provisions will ultimately lead to the impending “fiscal cliff.”
Earlier this year, when a new round of sparring over the budget limit began, House Speaker John Boehner (R-Ohio) said he would not allow another increase in the country’s borrowing limit without an accompanying amount of spending cuts and reforms.
Seven months after Boehner’s remarks, the White House and Congress have yet to reach an agreement.
President Barack Obama tried to include the borrowing limit in the most recent budget talks, but Republican leaders demanded concessions in return. These negotiations ended in an impasse last week, after Boehner showed willingness to raise the debt ceiling for a year if Obama agreed to severe cuts in entitlement programs.
Obama and lawmakers returned to Washington shortly after Christmas to resume talks, with the House of Representatives announcing Thursday evening that it will return on Sunday in the hopes of springing back into action.
“The hope is the Senate will act responsibly and send us back their plan—either pass the bill we sent them or send us back what they pass,” said Rep. Blake Farenthold (R-Texas). “We’re coming back on Sunday to be ready to address what the Senate sends us.”
Boehner said on Wednesday that the Senate must act first on any new plan.
“The lines of communication remain open, and we will continue to work with our colleagues to avert the largest tax hike in American history, and to address the underlying problem, which is spending,” said the House leader in a statement.
Obama has said he would refuse to let Republicans leverage spending cuts in return for increasing the debit limit. But Republicans are aware that the threat of voting against raising the debt ceiling is an effective way of winning deficit reduction concessions.
Congressional leaders from both parties will meet Obama at the White House this afternoon in an 11th hour attempt to broker a deal, even if it is a scaled-back version of the package they sought to pass after the November election.