VOL. 126 | NO. 106 | Wednesday, June 1, 2011
House to Reject Debt Limit Increase Without Cuts
DAVID ESPO | AP Special Correspondent
WASHINGTON (AP) – House Republicans lined up to reject their own proposed $2.4 trillion increase in the nation's debt limit Tuesday, a political gambit designed to reinforce a demand for spending cuts to accompany any increase in government borrowing.
"The blank check debt limit increase supported by President Obama and his fellow Democrats would send our great country into an economic death spiral," said Rep. Jim Jordan, R-Ohio, in a statement released before the beginning of debate on the House floor.
But Rep. Steny Hoyer of Maryland, the second-ranking Democrat, said Republicans were playing politics with the nation's creditworthiness.
"If we were adults and acting as adults, we would come together and give certainty to the markets that, 'Of course, America's going to pay its bills,'" he said.
The House legislation would allow government borrowing to reach $15.8 trillion, but it does not include any steps that GOP leaders – who arranged the vote – have demanded to restrain future spending.
Treasury Secretary Tim Geithner says Congress must raise the debt limit by Aug. 2 or the government will default, and he has warned the resulting turmoil could plunge the nation into another recession or even an economic depression.
Republicans, who are scheduled to meet with Obama at the White House on Wednesday, signaled in advance that the debt limit vote did not portend a final refusal to grant an increase.
The roll call was set for late in the day to avoid rattling the financial markets, while allowing rank-and-file lawmakers to vote against unpopular legislation the leadership has said eventually must pass.
The administration appeared eager to avoid criticizing Republicans. "It's fine, it's fine," said presidential press secretary Jay Carney when asked about the Republican decision to tie spending cuts with more borrowing.
"We believe they should not be linked because there is no alternative that's acceptable to raising the debt ceiling. But we're committed to reducing the deficit," Carney said.
The government has already reached the limit of its borrowing authority, $14.3 trillion, and the Treasury is using a series of extraordinary maneuvers to meet financial obligations.
By no longer would making investments in two big pension funds for federal workers and beginning to withdraw current investments, for example, the Treasury created $214 billion in additional borrowing headroom.
At the same time, the Obama administration and congressional leaders are at work trying to produce a deficit-reduction agreement in excess of $1 trillion to meet Republican demands for spending cuts.
Political maneuvering on legislation to raise the debt limit has become common in recent years, as federal deficits have soared and presidents of both political parties have been forced to seek authority to borrow additional trillions of dollars.
Because such legislation is unpopular with voters, presidents generally look to lawmakers from their own political party to provide the votes needed for passage. In the current case, though, Republicans control the House, and without at least some support from them, Obama's request for a debt-limit increase would fail.
At a news conference, Hoyer did not say how he intended to vote.
Rep. Peter Welch, D-Vt., drew support from more than 100 other Democrats recently when he circulated a letter calling for an increase in the debt limit without unrelated provisions. "My goal is to make sure we maintain our credit rating and our full faith and credit," he said.
However, House Speaker John Boehner, R-Ohio, announced months ago that he would demand spending cuts as a condition for passage.
"It's true that allowing America to default would be irresponsible," he said on May 9 in a speech to the Economic Club of New York. "But it would be more irresponsible to raise the debt limit without simultaneously taking dramatic steps to reduce spending and to reform the budget process."
He added that any spending cuts should be larger than the increase in borrowing authority, a statement meant to lay down a marker for the deficit-reduction talks led by Vice President Joe Biden.
Few details have emerged from those negotiations, although Biden said recently the negotiators had made progress. He expressed confidence they would be able to agree on specific cuts in excess of $1 trillion over the next decade, and then look to procedural mechanisms known as "triggers" to force further automatic deficit cuts adding up to another $3 trillion or so.
House Majority Leader Eric Cantor, a participant in the talks, said afterward, "I am confident that we can achieve over a trillion dollars in savings at this point, and hopefully more."
Earlier, Sen. Jon Kyl, R-Ariz., had said the discussions centered on deficit cuts totaling in the range of $150 billion to $200 billion over a decade, but that was from a relatively small category of programs.
Among the areas eyed for spending cuts is the federal pension program, where the White House has signaled it is receptive to a Republican proposal for employees to make greater contributions.
Associated Press writer Andrew Taylor contributed to this story.
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