Washington braced Tuesday for a replay of last summer’s tense battle over the burgeoning national debt as House Speaker John A. Boehner threatened again to block an increase in the federal debt ceiling without significant new cuts in spending.
Treasury Secretary Timothy F. Geithner and other senior Democrats quickly blasted the Ohio Republican, arguing that his ultimatum could put the nation’s credit rating — and the broader economy — at risk early next year, when the debt is expected to hit its $16.4 trillion limit.
“This commitment to meet the obligations of the nation, this commitment to protect the creditworthiness of the country, is a fundamental commitment you can never call into question or violate,” Geithner said. “We hope they do it this time without the drama and the pain and the damage they caused the country last July.”
Others noted that Boehner’s call for fresh spending cuts comes as many Republicans are trying to amend cuts adopted to satisfy GOP demands last summer, arguing that they fall too heavily on defense.
“It is pretty galling for Speaker Boehner to be laying down demands for another debt ceiling agreement when he won’t even abide by the last one,” Sen. Charles E. Schumer (D-N.Y.) said. “The last thing the country needs is a rerun of last summer’s debacle that nearly brought down our economy.”
The dust-up followed the release early Tuesday of prepared remarks that Boehner later delivered at Washington’s Mellon Auditorium, where longtime deficit hawk Peter G. Peterson was staging a summit to encourage policymakers to take action to tame the debt. Participants, including senior lawmakers from both parties, agreed that that is unlikely to happen before the Nov. 6 election.
But once the election is over, they said, the issue of the debt will quickly rise to the top of the agenda — and not just because of the debt limit. In January, policymakers also will be facing the first round of harsh, across-the-board spending cuts adopted last summer, as well as the expiration of a host of tax cuts that benefit every American household. Unless Congress agrees on an alternative deficit-reduction strategy, the policies threaten to deliver a fiscal shock that could throw the nation back into recession.
House Budget Committee Chairman Paul Ryan (R-Wis.), predicted Tuesday that lawmakers would somehow avoid a year-end “train wreck.” The senior Democrat on the panel, Rep. Chris Van Hollen (Md.), said he foresees an effort to “structure a framework” to make the big decisions on taxes and spending in the first part of 2013.
Boehner, meanwhile, made it clear that he is ready to use the debt limit as a cudgel to force Democrats to compromise, particularly on a strategy for restraining spending on Medicare and other federal health programs, which are the biggest drivers of future borrowing.
“Yes, allowing America to default would be irresponsible,” Boehner said. “But it would be more irresponsible to raise the debt ceiling without taking dramatic steps to reduce spending.
“I’m not angling for some higher office,” he said. “This is the last position in government I’ll ever have. I haven’t come this far to just walk away.”
Boehner continued to reject Democrats’ calls for higher taxes on the wealthy. That drew groans from Democrats, who noted that — despite sharp spending cuts — the no-new-taxes House GOP budget would itself require $5.2 trillion in fresh borrowing over the next decade.
“Republicans are playing chicken with our economy and manufacturing an unnecessary crisis,” Van Hollen said. “Even if we made every cut in their budget, it still requires that we raise the debt ceiling by $5.2 trillion. This isn’t just hypocritical, it’s dangerous.”
White House spokesman Jay Carney said, “It can’t possibly be the case that the right prescription for what we need to do right now is to engage in the kind of political brinksmanship that, unfortunately, congressional Republicans engaged in last year.”
Staff writer Rosalind S. Helderman contributed to this report.