WASHINGTON – Seeking to regain their budget footing versus President Obama, Republicans controlling the House are moving quickly to try to defuse a potential debt crisis with legislation to prevent a first-ever U.S. default for at least three months.
The Republicans are giving up for now on trying to extract spending cuts from Democrats in return for an increase in the government’s borrowing cap. But the respite promises to be only temporary, with the stage still set for major battles between the GOP and Obama over taxes, spending and deficits.
The first step comes today with a House vote on GOP-sponsored legislation that would give the government enough borrowing leeway to meet three months’ worth of obligations, delaying a showdown next month that Republicans fear they would lose.
Republicans leaving a two-hour meeting Tuesday afternoon appeared confident that the measure would pass.
While it’s commonly assumed that the Treasury Department wouldn’t allow a disastrous default on U.S. Treasury notes, the prospect of failing to meet other U.S. obligations such as payments to contractors, unemployment benefits and Social Security checks would also be reputation shattering. House Speaker John Boehner, R-Ohio, and other GOP leaders have made it plain they don’t have the stomach for it.
The legislation is disliked by many Democrats, but the White House weighed in Tuesday with a statement that the administration would not oppose the measure, even though Obama just last week dismissed incremental increases in the debt ceiling as harmful to the economy.
“I am not going to have a monthly, or every three months conversation about whether or not we pay our bills,” Obama said at a news conference Jan. 14.
But what was important to the White House about the GOP proposal was that it separated the debt ceiling from other upcoming fiscal target dates and that it signaled that, at least for now, Republicans were not going to demand a dollar of spending cuts for every dollar of federal borrowing as Boehner long has demanded. It also appeared that Senate Democrats would grudgingly accept the bill.
“The Boehner rule of 1-for-1, it’s gone,” said Sen. Chuck Schumer, D-N.Y. “So it’s a good step forward, and we’ll see what happens.”
The idea driving the move by GOP leaders is to re-sequence a series of upcoming budget battles, taking the threat of a potentially devastating government default off the table and instead setting up a clash in March over automatic across-the-board spending cuts set to strike the Pentagon and many domestic programs.
