GOP House leaders timed the vote Tuesday night to demonstrate that point before all 241 members of the Republican conference visit Obama on Wednesday. It will be his first meeting with the entire group since the party won the House majority in the November midterm elections.
For months, each side’s leaders have talked about how the financial markets would react if the U.S. Treasury were unable to raise the debt limit, with speculation that the country would default on its loans and cause broad panic in the global markets. Republican leaders think they have created a buffer by showing their intentions and holding the vote a full two months before the Aug. 2 deadline Treasury Secretary Timothy F. Geithner set for increasing the debt limit.
In addition, the vote will be held after the markets close. House leaders do not want a repeat of the September 2008 vote in which the House at first rejected the $700 billion Wall Street bailout and triggered the single largest one-day drop in stock prices ever.
This result is not expected to be close, as nearly every Republican and many Democrats are likely to oppose what in years past was a routine decision to increase the debt ceiling.
If the vote fails as expected, the focus will return to a bipartisan group of six congressional leaders who have been in private talks with Vice President Biden to come up with a massive package of spending cuts and allow the debt limit to rise. Both sides say they will easily exceed $1 trillion in reductions, with the vice president suggesting that number is only a “down payment” to agreement on much greater cuts by the August deadline.
With the Senate out of session this week, the next round of Biden talks is set for next week.
Early proposals for whittling down spending include a plan to drop federal agriculture subsidies and to require larger employee contributions to the pension system for non-military federal workers.
“Those talks, which actually we’ve been meeting for over three weeks now, they have been all positive. Everything is on the table,” House Majority Leader Eric Cantor (R-Va.) said Sunday on CBS’s “Face the Nation.” “We’ve said, as Republicans, we’re not going to go for tax increases. I think the administration gets that. But we’ve also put everything on the table as far as cuts.”
The GOP plan would actually require an additional $5.4 trillion in borrowing over 10 years, which is $4 trillion less than the $9.4 trillion in borrowing required by Obama’s original budget proposal. Republicans would achieve some of these savings through modest reforms to Medicare in the next 10 years. The biggest savings would begin in 2022, when the program would be run similar to a voucher plan in which seniors would buy coverage from private insurers with federal subsidies.
The proposal has created a political firestorm on Capitol Hill.
For weeks, Democrats have accused Republicans of trying to “end Medicare as we know it.” They have hammered that point home after scoring an upset victory last week in New York in a special House election in the conservative-leaning 26th Congressional District, outside Buffalo. During the campaign, Democrats focused almost entirely on the Medicare proposal and are planning to do the same in dozens of districts nationwide where potentially vulnerable Republicans voted for the Medicare change in mid-April.
“They cannot escape from that vote, other than to say ‘I voted against it after I voted for it,’ ” said Rep. Steve Israel (N.Y.), chairman of the Democratic Congressional Campaign Committee. Israel noted that there are 97 other GOP-held House districts in which Obama performed better in the 2008 presidential campaign than he did in the 26th Congressional District.
“That should cause some sleepless nights,” he said.
Democrats have slammed the Republicans’ refusal to support any net increase in tax receipts to help boost revenue.
After some wavering early this month, GOP leaders have embraced the Medicare plan, submitted by Budget Committee Chairman Paul Ryan (R-Wis.). Although the Senate rejected Ryan’s budget last week, 42 of the chamber’s 47 Republicans voted in favor of it.
However, Senate Minority Leader Mitch McConnell (R-Ky.) has cautioned conservatives that it is highly unlikely that Obama and Senate Democrats will agree to the full Ryan plan, suggesting instead that the goal is to draw “significant” savings from Medicare whether Ryan’s budget is part of that final deal or not.
“I’m personally very comfortable with the way Paul Ryan would structure it,” McConnell said Sunday on NBC’s “Meet the Press.” “But we have a Democratic president. We’re going to have to negotiate with him on the terms of changing Medicare so we can save Medicare.”