A leading House Republican on Monday challenged the notion that the United States will go into default if Congress fails to raise the country’s debt ceiling, renewing an argument that has gained traction among conservatives in both chambers.
“Keeping the debt ceiling at its current level would force Congress to prioritize spending, but it would not force a default on our debt,” Rep. Jim Jordan (Ohio), chairman of the conservative Republican Study Committee, said in a statement. “The only thing forcing a default would be Treasury Secretary [Timothy] Geithner allowing such a catastrophe to take place.”
The Treasury Department announced Monday that the country had officially hit its $14.3 trillion debt ceiling, although the administration has said that because of extraordinary measures it is taking, Congress has an Aug. 2 deadline for raising that limit.
Jordan’s argument Monday echoed that of another prominent conservative, freshman Sen. Pat Toomey (R-Pa.), who has contended that the United States has sufficient revenue to avoid default by making only principal and interest payments past Treasury’s Aug. 2 deadline.
In February, Toomey introduced legislation that he argues would allow the United States to do just that; his bill, the “Full Faith and Credit Act,” has garnered 22 co-sponsors, including eight of the 12 Senate Republican freshmen. Jordan, meanwhile, is one of 94 co-sponsors of companion legislation in the House; among the co-sponsors are 45 of the 87 House Republican freshmen.
Wednesday morning, Toomey is set to deliver an address at the American Enterprise Institute during which he is expected to renew his call for the legislation’s passage.
Jordan’s statement suggests that the Republican Study Committee and other conservatives are not backing away from their assertion that hitting the debt ceiling does not equate to defaulting on the country’s debt obligations, a view that the Obama administration has strongly disputed.
(In February, Toomey and Geithner got into a public spat over the issue as they sent a series of letters back and forth accusing each other of debt-limit “alarmism.”)
It remains unclear, however, whether Republican leaders in either chamber have signed on to that view. House Speaker John Boehner (R-Ohio) issued a statement Monday again calling for spending cuts to be included in a debt-limit vote, although he did not indicate whether he thought a failure to raise the debt ceiling would result in default.
“No one wants to default on the full faith and credit of the United States, but the American people are going to insist on real spending cuts and real reforms as part of this debate,” Boehner spokesman Michael Steel said. Steel did not indicate whether Boehner backs the House version of the Toomey legislation.
Meanwhile, congressional Democrats argued that Monday’s milestone of reaching the debt limit was even further proof that Congress must act on the issue or face dire consequences.
Senate Majority Leader Harry Reid (D-Nev.) cast the decision facing Congress as a choice between two doors.
“Behind door number one is a choice the chairman of the Federal Reserve calls ‘catastrophic,’” Reid said on the Senate floor. “The secretary of the Treasury says that if we open that same door, it could lead to a financial crisis ‘more severe than the crisis from which we are only now starting to recover.’ And the majority of the American people we represent say opening that door would be ‘disastrous.’ Not just a bad idea, not one that would lead to discomfort – but one that would lead to disaster.”
“It wouldn’t be just irresponsible to make that choice,” Reid said. “We would be out of our minds.”
The debt-ceiling tit-for-tat comes as a new Politico-George Washington University poll shows that conservatives are less likely than Democrats to view the results of a potential default as “disastrous.”
Democrats have called for a “clean” extension of the country’s borrowing limit, while the Republican Study Committee last week detailed its conditions for a debt-ceiling vote, which include measures to halve the deficit next year; an 18 percent cap on the spending-to-GDP ratio; and a balanced budget amendment that includes provisions barring tax increases.