Financial industry executives, business leaders and Treasury Department officials are visiting the freshmen in their offices, briefing them in small groups and even cornering them at dinner parties. It’s all part of a behind-the-scenes campaign to school congressional newcomers in the economic stakes of Washington’s next big fiscal fight: over the debt ceiling.
The freshman class that gave Republicans the House majority will be a critical voting bloc in the looming clash over whether to raise the amount of money the government can borrow to keep it from defaulting on its loans.
“It is the big vote for all of us,” said Rep. James Lankford (R-Okla.). “I don’t think there’s been a week that I’ve been here where we’ve not had some kind of conversation with somebody dealing with debt ceiling issues.”
Like many in his class, Lankford had no prior experience in government. He was an evangelical youth-camp director before running for Congress last year as a fiscal conservative.
“All of us who are private citizens study the debt and can see it from a distance,” he said. “But when you get here and you get into the facts and into the weeds, it’s worse than you ever thought.”
The nation is expected to hit its current $14.3 trillion debt limit by mid-May. Treasury Secretary Timothy F. Geithner has said he could take emergency measures to buy time until July 8, but if no action were taken by then, the government would fall into default.
When Congress returns from its two-week spring recess on May 2, the debt limit will take center stage. But congressional leaders have signaled that it will be part of a broader spending deal. It could take several weeks, at a minimum, for Democrats and Republicans to reach an agreement.
Economists say failure to raise the debt ceiling would lead to cascading repercussions that would damage the United States’ creditworthiness and spark a debt crisis just as the country is recovering from the recession. Weeks of uncertainty about whether the ceiling will be raised could also cause havoc in financial markets, financial executives said.
Unlike many other nations, the United States limits its debt by congressional authority. And although raising the cap is one of the least popular votes that legislators take, they traditionally approve it when the issue comes up every few years.
But industry executives fear that this year could be different. The public scrutiny on spending issues is intense, and many congressional Republicans, under the watchful eye of tea party activists, have been loath to do anything that even appears like it could lead to more spending.
Industry officials said they have been warning lawmakers that a failure to act would reverberate not only through the bond markets, but across America. The government would no longer be able to pay for its commitments, such as Medicare and Social Security.