U.S. Hill GOP Faces Big Strategic, Tactical Decisions on Budget

Published Jan 18, 2013. By John Shaw.


US Hill GOP Faces Big Strategic, Tactical Decisions On Budget

-Congressional GOP Must Decide If Wants To Link, Divide Fiscal Trilogy -House Budget Committee Chairman Ryan Floats Short-Term Debt Hike


WASHINGTON (MNI) - During their three-day retreat this week in Williamsburg, Virginia, House Republicans sat through policy presentations and listened to the pitches of two motivational speakers as the GOP sought a broad strategic plan and short-term tactical moves to advance their fiscal agenda this year.

Arguably, it may have been more useful if they invited former Secretary of State Henry Kissinger to discuss the perils of complex negotiations with a determined adversary, the relative merits of linking or decoupling issues during talks, and the wisdom of all-out warfare versus detente.

President Barack Obama and Congress face three looming fiscal deadlines: the need to increase the $16.4 trillion statutory debt ceiling between mid-February and March 1; the imposition of across-the board spending cuts on March 1; and the expiration of a bill funding the federal government on March 27.

Obama has said repeatedly and emphatically that while he is willing to work with Democrats and Republicans on additional deficit reduction measures, these must include a mix of spending cuts and tax increases. And he has insisted that future deficit reduction must be considered apart from debt ceiling legislation.

"They will not collect a ransom in exchange for not crashing the American economy," Obama said of the GOP during a press conference Monday.

"While I'm willing to compromise and find common ground over how to reduce our deficit, America cannot afford another debate with this Congress over how to pay the bills they've already racked up. To even entertain the idea of this happening, of America not paying its bills, is irresponsible. It's absurd," the president said.

House Speaker John Boehner has said for many months that the debt ceiling increase must be coupled with spending cuts, adding that $1 trillion debt ceiling increase must be linked to a $1 trillion package of spending cuts.

House Republicans are now trying to decide in a concrete way how to tackle these various fiscal challenges.

"The worst thing for the economy is to move past these events that are occurring with no progress made on the debt and deficit," House Budget Committee Chairman Paul Ryan told reporters Thursday.

Ryan said the House GOP is pondering a short-term increase in the debt ceiling, presumably so that it would be considered again in the winter or early spring when action will be needed on the stop-gap spending bill and on legislation altering the scheduled across-the-board spending cuts.

"We're discussing the possible virtue of a short-term debt limit extension so that we have a better chance of getting the Senate and White House involved in discussions in March. What we want to achieve at the end of the day is a two way discussion between Democrats and Republicans and, out of that, hopefully some progress being made about getting the deficit and debt under control," Ryan said.

Senate Minority Whip John Cornyn, the second ranking Senate Republican from Texas, told the Houston Chronicle this week that the debt ceiling will be increased in a timely way this year.

"We will raise the debt ceiling. We're not going to default on our debt," Cornyn said.

"I will tell you unequivocally, we're not going to default," he added.

Cornyn took a less conciliatory line on the stop-gap spending bill several weeks ago when he wrote in a Jan. 3 op-ed that "it may be necessary to partially shut down the government in order to secure the long-term fiscal wellbeing of our country, rather than plod along the path of Greece, Italy and Spain."

With the debt ceiling deadline looming, two timeless laws of Washington life are now in full evidence: lawmakers are offering largely symbolic bills to deliver their preferred debt ceiling message and U.S. think tanks are cranking out a blizzard of reports on the history of the debt ceiling and are outlining possible ways to avert another confrontation between President Barack Obama and Congress.

On the legislative front, a group of House Democrats released a bill Wednesday to abolish the federal debt ceiling. One of the supporters of this idea, New York Congressman Jerry Nadler, said in a statement that "a repeal of the debt ceiling would allow Congress to move forward with legislation that actually promotes jobs, economic recovery and growth."

The idea of eliminating the debt ceiling is one that many fiscal experts, including Federal Reserve Board Chairman Ben Bernanke, support conceptually. But a Republican controlled House is certain to reject that idea out of hand -- at least as long as there is a Democratic president..

From an entirely different ideological perspective, several conservative House Republicans have offered bills that would prioritize payments in the event of a continued stalemate on the debt ceiling. One GOP lawmaker, David Schweikert of Arizona, would require the government to first meet its obligations on the public debt and then pay Social Security benefits and military pay.

Another GOP bill, drafted by Daniel Webster of Florida and Michael Fitzpatrick of Pennsylvania, sets payment priorities in this order: interest on the national debt, military pay, national security funding, Social Security payments and Medicare payments.

The Obama administration has dismissed the idea of prioritizing payments as unworkable and possibly illegal.

These bills by rank and file members provide an interesting back story to the debt ceiling debate, but are far less important than the strategies that House Speaker John Boehner and Senate Majority Leader Harry Reid are still developing on how to proceed on the debt limit.

As the debt ceiling debate approaches, U.S. think tanks continue to crank out a steady procession of reports on its history, mechanics, and its utility as a device to shape American fiscal policy.

Like a factory assembly line that changes the products that it produces, thinks tanks have ended their months long flood of fiscal cliff reports and have replaced them with debt ceiling reports.

The Bipartisan Policy Center has issued two very detailed reports on the nuances of Treasury's cash management practices and has tried to identify the "X Date" by which the ceiling must be increased. In a statement last week, the BPC said it "now projects that the X Date will occur between February 15 and March 1. Our model estimates that the most likely candidate for the X Date is in the latter half of that range."

The Concord Coalition issued this week a report called, "It's Time To Raise and Reform the Statutory Debt Ceiling." The report argues that Congress should increase the debt ceiling and "promptly develop a comprehensive, specific and credible plan to place our nation on a sustainable fiscal path. Lawmakers should consider the entire federal budget to be on the table--including entitlement programs, domestic discretionary spending, defense spending and revenues."

The Council on Foreign Relations has a "U.S. Debt Ceiling: Costs and Consequences" report on its website which discusses the history of the debt ceiling, what the government can do if the debt ceiling isn't reached, and the impact a debt ceiling stalemate would have on financial markets and the value of the dollar.

The Congressional Research Service has issued an updated report on the debt ceiling that focuses on its potential effects on government operations.

Staying clear of the partisan debate, the CRS report says that "it is extremely difficult for Congress to effectively influence short-term fiscal and budgetary policy through action on legislation adjusting the debt limit. The need to raise (or lower) the limit during a session of Congress is driven by previous decisions regarding revenues and spending stemming from legislation enacted earlier in the session or in prior years. Nevertheless, the consideration of debt limit legislation often is viewed as an opportunity to reexamine fiscal and budgetary policy."