The debt ceiling and the deficit will be center stage at the White House on Wednesday following a largely symbolic House vote last night in which Republicans overwhelmingly rejected a $2.4 trillion increase in the nation's borrowing limit – insisting that it be linked to major cuts in federal spending.
By a 318-97 vote, the House defeated the measure as House Speaker John Boehner, R-Ohio, and other GOP leaders sought to demonstrate that nothing will be done to raise the Treasury’s borrowing authority until Republicans complete negotiations with President Obama and Senate Democratic leaders on a major deficit-reduction package. Treasury Secretary Tim Geithner has said that Congress has until August 2 to raise the $14.3 trillion debt ceiling or risk the first default in U.S. history.
Boehner’s position is that in order for Republicans to support an increase in the debt ceiling, “spending cuts should exceed the amount of increase in the debt limit.” And reflecting the thinking of many of his fellow Republicans, Rep. Jim Jordan of Ohio said in a statement: “The blank-check debt-limit increase supported by President Obama and his fellow Democrats would send our great country into an economic death spiral.”
Since 1962 the debt limit has been raised 74 times--frequently with intense political wrangling. All 97 votes in favor of the measure were cast by Democrats, and nearly 100 Democrats voted against it. But Rep. Chris Van Hollen of Maryland, the ranking Democrat on the House Budget Committee, dismissed Republican rejection of a higher debt ceiling as a “political stunt.” In a statement, Van Hollen said: “Republicans are demagoguing the debt ceiling increase for political gain, but their own budget would add $8.8 trillion to the debt over the next decade. By threatening to default, they are simply holding jobs and the economy hostage in order to pass their extreme budget that dismantles the Medicare guarantee.”
House Republicans would, no doubt, dismiss the characterization of their rejection as a stunt, but in a bit of political stagecraft, they scheduled the vote on the eve of their meeting with President Obama at the White House this morning. All 241 members of the House GOP Conference will confer with the president in their first meeting since they gained control of the House in November.
Todd Weiner, spokesperson for Rep. Cathy McMorris Rodgers, R-Wa., Vice Chair of the Conference, said members will tell the President that there will not be a debt ceiling increase without federal spending cuts. “We don’t want to have a [debt crisis] situation like Greece,” Weiner said. “There is no alternative.”
When asked about the Republican decision to tie spending cuts to more borrowing, White House press secretary Jay Carney said: "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.”
A bipartisan group of six Democratic and Republican lawmakers--the so-called “Gang of Seven" been meeting nearly twice a week with Vice-President Joe Biden. It appears on track to reach agreement on more than $1 trillion in spending cuts in the short term as a down payment, with an eye to a total of $4 trillion in deficit reduction in the coming decade or so. After a recent meeting, House Majority Leader Eric Cantor, R-Va., a participant in the talks, said: "I am confident that we can achieve over a trillion dollars in savings at this point, and hopefully more."
From the outset, the Biden group has spent the majority of its time seeking common ground for budget cuts. The past few sessions have focused on health care savings, according to a person familiar with the talks. “They will be on health care for at least the foreseeable future,” a Hill staffer said.
The House Republican budget includes a provision to turn Medicare into a voucher program, which has sparked a contentious debate among lawmakers and 2012 GOP presidential candidates. Recent polls suggest overhauling the program is highly unpopular with Americans. Political analysts have said the Republican proposal was largely responsible for a stunning Democratic upset in a special House election in a conservative Upstate New York district last week.
The importance of the Gang of Seven’s work has risen since the collapse of the Senate’s “Gang of Six” Democrats and Republicans several weeks ago.
With the Senate on recess this week, the next round of Biden talks is slated for next week.
Debt Ceiling Talks: How to Cut $1 Trillion (CNN)
In Showdown over Debt, Neither Party Is Blinking (New York Times)
White House Turns to Reagan to Make Point on Debt Ceiling Vote (Wall Street Journal)