Congressional Republicans may prove willing to postpone a looming battle over an increase in the nation’s debt ceiling as part of the negotiations over the so-called fiscal cliff – at least for a little bit.
House Speaker John Boehner (R-Ohio), who met with President Obama on Monday, has offered to avoid the give-and-take over raising the debt ceiling over the space of a year if the White House, in return, supports about $1 trillion in federal spending cuts.
The president, according to reports, responded by calling for a two-year moratorium.
It’s all part of the debate over ways to best address the growing national debt. Failure to develop a mutually acceptable plan between Congress and the administration by the end of the year will force tax hikes and automatic budget cuts – an unpalatable possibility since economists warn it could lead to another recession.
The federal government currently is about $50 billion from reaching the $16.4 trillion debt limit set in 2011 after a substantial amount of partisan wrangling. The cap on the nation’s borrowing authority is expected to be reached by the last week of December. The Treasury Department maintains it can apply temporary measures to keep the government moving. But if the ceiling isn’t raised by some time in February, the U.S. could default on its obligations for the first time in history.
Obama appears determined to take steps necessary to avoid the sort of partisan showdown that enveloped the most recent debt limit debate. Treasury Secretary Tim Geithner, who has called for the elimination of the debt ceiling, offered congressional Republicans an alternative idea in late November as part of the administration’s plan for dealing with the so-called fiscal cliff.
Under that White House proposal the debt limit would no longer require a positive congressional vote. Instead, the president would inform the House and Senate that a debt-ceiling increase is pending. Congress could opt to pass on taking any action, thus permitting the hike to go into effect, or vote against it. The president could veto any negative vote.
In a presentation to the Business Roundtable in Washington on Dec. 5, Obama criticized Republican plans to use the debt limit for leverage in budget negotiations, asserting it is “a bad strategy for America. It is a bad strategy for our businesses. And it is not a game that I will play.”
“Everybody here is concerned about uncertainty,” he said. “There’s no uncertainty like the prospect that the United States of America — the largest economy that holds the world’s reserve currency — potentially defaults on its debts, that we give up the basic notion that the United States stands behind its obligations.’’
Obama promised to “break that habit” of holding the debt limit hostage and taking the nation to the brink of default “before it starts.”
But Senate Republican Leader Mitch McConnell, of Kentucky, immediately rejected the administration’s offer, maintaining that Obama is “the last person who should have limitless borrowing power” given the president’s history of addressing the debt.
“By demanding the power to raise the debt limit whenever he wants by as much as he wants he showed what he’s really after is assuming unprecedented power to spend taxpayer dollars without any limit,” McConnell said. “This isn’t about getting a handle on deficits or debt for him. It’s about spending even more than he already is. Why else would he demand the power to raise the debt limit on his own?”
Retaining the debate over the debt limit is “the only way we ever cut spending around here,” McConnell said, vowing that the president’s plan is “not going to happen.”