U.S. Budget Week: Congress Reverses Modest Military Entitlement Reform

Published Feb 14, 2014. By John Shaw. In Market News International (MNI).

It's difficult to view the Republican decision this week to allow for congressional passage of clean debt suspension legislation as anything other than a GOP agreement to sue for fiscal peace until after the mid-term elections in November.

With Republicans hopeful they will retain control of the House and possibly win control of the Senate, party leaders seem to have decided that a contentious fiscal fight with Democrats makes no sense.

Over the past three years, House Speaker John Boehner and Senate Minority Leader Mitch McConnell have led congressional Republicans into the fiscal fray, with President Barack Obama and Senate Majority Leader Harry Reid spearheading the Democratic response.

It was Boehner, at a Tuesday morning briefing at a conference room at the Republican National Committee's offices on Capitol Hill, who formally raised the white flag.

In response to a question, he tersely announced that the House would be voting on a clean bill to suspend the debt ceiling until March 15, 2015.

"You've all known that our members are not crazy about voting to increase the debt ceiling," Boehner said to reporters.

"Our members are also very upset with the president. He won't negotiate. He won't deal with our long-term spending problems without us raising taxes. He won't even sit down and discuss these issues. He's the one driving up the debt and the question they're (House Republicans) asking us is, why should I deal with his debt limit? So the fact is, we'll let the Democrats put the votes up, we'll put a minimum number of votes up to get it passed," Boehner said.

For those who have followed the fiscal battle between the GOP and the White House, Boehner's comments were a nearly Shakespearean reversal of fortunes from a position he staked out three years earlier.

In a speech to the Economic Club of New York on May 9, 2011, Boehner vowed to use the debt ceiling as leverage to compel Obama and congressional Democrats to accept major entitlement reforms.

"It is true that allowing America to default would be irresponsible. But it would be even more irresponsible to raise the debt ceiling without simultaneously taking dramatic steps to reduce spending and reform the budget process. To increase the debt limit without simultaneously addressing the drivers of our debt - in defiance of the will of our people - would be monumentally arrogant and massively irresponsible" Boehner said.

He added: "So let me be as clear as I can be. Without significant spending cuts and reforms to reduce our debt, there will be no debt-limit increase. And the cuts should be greater than the accompanying increase in debt authority the president is given," he said.

This vow led to high stakes fiscal negotiations in the summer of 2011 that resulted in the Budget Control Act which secured more than $2 trillion in mostly discretionary savings in exchange for a debt limit increase of about that same size.

But Republicans decided this year, in the aftermath of this last fall's 16 day government shutdown and debt ceiling stalemate, there was little to be gained by another debt ceiling battle with the president.

The House passed the debt ceiling suspension bill Tuesday on a 221-to-201 vote.

The Senate voted 55 to 43 Wednesday to approve the same debt ceiling bill, sending it to Obama for his signature.

The GOP decision to capitulate on the debt ceiling generated some intra-GOP discord. That discord played out during an astonishing hour on the Senate floor Wednesday during which Republican leaders essentially negotiated among themselves in full public view about which senators would cast the votes needed to allow the debt ceiling to go forward.

After Republican Senator Ted Cruz demanded a 60-vote threshold to end debate on the debt ceiling bill, McConnell and Senate Minority Whip John Cornyn reluctantly decided to support the Democratic motion to end debate on the bill. They were ultimately joined by 10 other Republican senators in supporting the motion.

All Senate Republicans voted against the actual debt ceiling suspension bill in the following vote. Both McConnell and Cornyn face primary challenges this year and both of their opponents scorched the GOP leaders for supporting the procedural motion.

Bob Bixby, the executive director of the Concord Coalition, said the GOP decision not to battle over the debt ceiling this year appears driven by the view that this fight would gain them little either in public policy or political terms.

"Republican leaders clearly have no appetite to get into a messy budget fight with Obama and congressional Democrats this year. It would lead to no productive policy conclusion from their perspective and could only hurt them in the November mid-term elections," he said.

Bixby said that while the GOP's debt ceiling reversal was striking to observe, the most consequential fiscal policy action of the week was the large bipartisan vote in both chambers to rescind a recently enacted 1 percentage point reduction in cost-of-living adjustments for veterans under 62.

"This was the one hard choice that was made a few months ago in the Ryan-Murray budget agreement," Bixby said, referring to the December budget agreement by House Budget Committee Chairman Paul Ryan and Senate Budget Committee Chairman Patty Murray.

"While the cost of this decision was not big in dollar amounts, the message this vote sends is huge. The message Congress sent is this: 'Even if we talk about supporting entitlement reform, we don't really mean it.' When it comes to specific steps to actually scale-back specific entitlement programs both parties oppose those - by huge majorities. This is deeply, deeply discouraging," Bixby said.