House Republicans are threatening to play hardball with President Obama over the debt ceiling, saying they are prepared to allow the government to default on its debt and force a government shutdown unless Obama cuts spending and entitlement programs.
“I think it is possible that we would shut down the government to make sure President Obama understands that we’re serious,” House Republican Conference Chairwoman Cathy McMorris Rodgers of Washington state told Politico. “We always talk about whether or not we’re going to kick the can down the road. I think the mood is that we’ve come to the end of the road.”
According to Politico, more than half of the House GOP would support this nuclear approach to forcing the president’s hand. Though nothing is certain, the GOP's strategy will begin to cystalize this week after House Speaker John Boehner huddles with House leadership Monday to strategize how best to navigate the spending showdown in the coming months. - Read more at Politico
DEFENSE CUTS COULD STING DC SUBURBS Tough times may be ahead for the Northern Virginia suburbs of Washington, D.C., which have enjoyed years of economic boom thanks to defense contractors and federal government jobs, while the rest of the country suffered through the Great Recession of 2008.
The Fiscal Times’ Josh Boak and Eric Pianin report that the four Virginia congressional districts within a short drive of the capital received $45 billion in defense contracts in 2011 alone, making these suburbs incredibly vulnerable to sudden shifts in spending policy.
This could mean a tough road ahead for Northern Virginia and other regions with large defense industry footprints as defense spending is already scheduled to take a hit, and could very likely absorb even more cuts depending on the result of the debt ceiling showdown. - Read more at The Fiscal Times
TREASURY KILLS THE PLATINUM COIN OPTION It was fun while it lasted, but Treasury officials finally put an end to the political pundits’ pipedream of minting a $1 trillion coin to avoid an excruciating debt ceiling showdown in the coming months.
The coin idea gained a lot of attention last week from media-types as well as several well-respected economists. It takes advantage of a provision in the law that allows the Treasury to mint legal tender platinum coins in any denomination for collectors. Under the gambit, the government would mint a $1 trillion coin and then deposit it at the Federal Reserve to temporarily finance the government until the debt ceiling is lifted again.
Over the weekend, the Treasury and the Federal Reserve both hit the breaks on that idea.
“Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,” Treasury Department spokesman, Anthony Coley, told The Washington Post. - Read more at The Washington Post
HOUSE TO VOTE ON SANDY AID THIS WEEK The House is expected to vote on the $50 billion in relief to Hurricane Sandy victims tomorrow. However, don’t expect the bill to pass without a fight, since many Republicans are complaining that it is laden with pork and spending unrelated to the Sandy catastrophe.
- Read more at The New York Times
-- Updated at 6 p.m. --
OBAMA REFUSES TO NEGOTIATE OVER DEBT CEILING President Obama warned House Republicans that he will not allow them to use the debt ceiling as a bargaining chip in the coming fiscal showdown in order to get the spending cuts they want.
“They will not collect a ransom in exchange for not crashing the American economy,” Obama said during his last news conference of his first term. “The full faith and credit of the United States of America is not a bargaining chip.”
The president’s remarks come on the heels of several threats from House GOP members who are entertaining the idea of allowing the government to default on its debt if the President refuses to cave to their demands on certain cuts to entitlement programs.
“It would be a self-inflicted wound on the economy,” Obama said. “It would slow down our growth and tip us into recession. To even entertain the idea of this happening is irresponsible... It’s absurd.” - Read more at The Fiscal Times
McCONNELL: “YOU’RE ON” Like it or not, Republican lawmakers are absolutely entertaining that idea.
Senate Minority Leader Mitch McConnell pushed back against the president’s remarks almost immediately, confirming the unavoidable battle over the debt ceiling that lies ahead and fueling the GOP’s threats to allow a government shutdown if they don't get the entitlement cuts they demand.
McConnell said the debt ceiling debate is the perfect time for the “president and his allies to get serious about spending.”
“We are hoping for a new seriousness on the part of the President with regard to the single biggest issue confronting the country and we look forward to working with him to do something about this huge, huge problem,” McConnell said in a statement. - Read more at Politico
WHITE HOUSE TO MISS BUDGET DEADLINE…AGAIN For the fourth time in five years, the White House will miss the legal deadline to send the president’s budget to Congress.
Last Friday, the White House notified House Budget Committee Chairman Paul Ryan’s office that the budget would not be submitted by the Feb 4. deadline, and has yet to give any indication of when it might be ready. - Read more at The Hill