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January 24, 2013

Debt crisis averted — but spring fight still ahead

WASHINGTON — Retreating with a purpose, Republicans sped legislation through the House on Wednesday to avert the imminent threat of a government default but pointing the way to a springtime budget struggle with President Barack Obama over Medicare, farm subsidies and other benefit programs.

The current legislation, which cleared the House on a bipartisan vote of 285-144, would permit Treasury borrowing to exceed the limit of $16.4 trillion through May 18. As it passed, Speaker John Boehner pledged that Republicans would quickly draft a budget that would wipe out deficits in a decade, and he challenged Democrats to do the same.

The Democratic-controlled Senate is expected to approve the debt bill as early as Friday or perhaps next week. The White House welcomed the legislation rather than face the threat of a first-ever default at the dawn of the president’s second term in the White House, and spokesman Jay Carney pointedly noted a “fundamental change” in strategy by the GOP.  

House Republicans cast the bill as a way to force the Senate to draft a budget for the first time in four years, noting that if either house fails to do so, its members’ pay would be withheld. They called the bill “no budget, no pay,”’ a slogan if not a statement of fact, since lawmakers would be entitled to collect their entire salaries at the end of the Congress with or without a budget in place.

With polls showing their public support eroding, the Republicans jettisoned, for now at least, an earlier insistence that they would allow no additional borrowing unless Obama and the Democrats agreed to dollar-for-dollar federal spending cuts in exchange.

The average American family “can’t buy everything they want every day; they have to make tough choices. It’s time to make Congress make the same choices,” said Rep. Dave Camp, R-Mich., underscoring the new Republican rallying cry.

Rep. Paul Ryan, the Wisconsin lawmaker who will be responsible for drafting the budget for Republicans, said Congress has “a moral obligation” to prevent a debt crisis that he said will hit hardest at seniors and others who depend on government the most.

As chairman of the House Budget Committee, Ryan will take the lead role in crafting a blueprint expected to rely heavily on savings from benefit programs. The budget he wrote last year before being picked as the party’s vice presidential candidate was to take two decades to achieve balance.

Ryan’s 10-year-budget task will be eased in part by higher tax revenues resulting from the Jan. 1 expiration of a two-year payroll tax cut, and in part from an anticipated $600 billion generated by raising rates on upper incomes. But given the sheer size of annual deficits in the $1 trillion range, it will be impossible to meet his goal without taking large savings from benefit programs such as Medicare and Medicaid, farm and student loan subsidies, the federal retirement program and more.

House Democrats made no attempt to defend the Senate’s failure to draft a budget over the past three years, instead saying a mere four-month extension in the debt limit would not give business and the financial markets the certainty that is necessary for the economy to grow more quickly.

Rep. Chris Van Hollen of Maryland, his party’s senior Budget Committee member, said the good news was, “Republicans have finally recognized the government must pay its bills. ... The bad news is they only want to do it for four months.”

Beyond the rhetoric lay a political calculation on the part of Boehner and other House Republicans that they could not afford to set up an immediate confrontation with Obama. At a closed-door retreat last week, the rank and file was presented with polling that showed their support eroding since the election into the mid-to-high 20s, and indicating that increasingly the public believes they oppose Obama out of political motives rather than on policy grounds.    

The same surveys show significant support for spending cuts, although backing wanes when it comes to reductions in individual programs that are popular.

Several officials said the leadership and Ryan had solidified rank-and-file Republicans behind a shift in strategy by emphasizing a commitment to a budget that would eliminate deficits in a decade, and the sentiment was expressed Wednesday on the House floor.

“This is why I ran for office. This is why I came to Washington, D.C.,” said Rep. Tom Reed of New York, first elected in 2010 as part of a tea party-flavored wave that gave Republicans their majority.

Another Republican, Rep. Michael Fitzpatrick of Pennsylvania, answered Democratic taunts: “This is not a gimmick,” he said.

Already, both sides were laying down markers for the struggle ahead.

Across the Capitol, Senate Democrats had already announced their intention to approve a budget, although they have made it clear they will insist on additional tax revenue that Republicans are sure to resist.

In his Inaugural address on Monday, Obama mentioned the deficit only once, and in passing. When it came to programs likely to bear the closest scrutiny from Republican budget cutters, he said, “We must make the hard choices to reduce the cost of health care and the size of our deficit.” But he also said, “The commitments we make to each other —  through Medicare and Medicaid and Social Security — these things do not sap our initiative, they strength us. They do not make us a nation of takers, they free us to take the risks that make this country great.”

The congressional calendar requires the House and Senate to approve versions of a budget by early spring. Assuming that happens, the two are then reconciled, and the resulting compromise sets the framework for spending and tax legislation for the fiscal year that begins on Oct. 1.

The president’s signature is not required on the budget itself, but legislation that attempts to carry it out goes to him for his approval or veto.

Republicans hope public sentiment will strengthen their hand for negotiations with the White House on those bills, although there are earlier chokepoints they hope to exploit as well. In particular, across-the-board spending cuts are to take effect beginning March 1, and it is something of an article of faith among many GOP lawmakers that the president would rather agree to an alternative that targets savings.

Also, funding for most of the government expires on March 27, giving conservatives yet another chance to try and reduce overall spending. That strategy is not without considerable risk, though. Republicans suffered grievous political damage in the mid-1990s when they engineered a pair of government shutdowns in a battle with President Bill Clinton over spending.

Supporters of the debt limit bill did not estimate the additional borrowing that would occur, but the Bipartisan Policy Center forecast about $450 billion if it is signed into law by month’s end. Despite the May 18 date, the group also predicted Treasury would be able to take additional steps that would allow it to meet obligations through at least the end of July.

————

Associated Press writer Jim Kuhnhenn contributed to this story.

 

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