The federal debt limit is set to kick back into effect next weekend after a three-month hiatus, marking the start of a political game of chicken likely to culminate in the fall, when Congress will have to give President Obama a higher limit or risk a federal default.
Which raises the perennial question: How far are congressional Republicans willing to push this?
Many Democrats predict Republicans will fold like a cheap suit as the deadline approaches, eager to avoid the disaster of 2011, when the last debt-limit showdown sent congressional approval ratings plummeting into single digits. GOP lawmakers pretty much caved in January, when the House voted without much fuss to suspend enforcement of the debt limit until May 19.
“There is no doubt in our minds that no Republican leader wants to default,” said House Minority Whip Steny Hoyer (D-Md.). “If we default” or if the U.S. credit rating is downgraded again, “I think they’re going to pay a hellacious price for their fiscal irresponsibility.”
For now, House Speaker John A. Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.) are talking tough, vowing to block a debt-limit increase unless Obama agrees to cuts and reforms that they say are necessary to put the nation on a path to a balanced budget.
“It’s extremely unlikely that any Republican is going to raise the debt ceiling without doing something about the debt,” McConnell said Tuesday.
Still, there are already signs of GOP anxiety.
Take the measure that is set to come before the House on Thursday. It started out as a garden-variety prioritization bill that would have directed Treasury Department officials to pay certain bills first if they hit the debt limit, are forced to stop borrowing and have to make due with incoming tax receipts.
But House Ways and Means Committee Chairman Dave Camp (R-Mich.) rewrote the bill to carve out exemptions to the debt limit, so the Treasury Department could continue borrowing to make interest payments to creditors and to the Social Security trust fund. Analysts at the Bipartisan Policy Center say the measure, if adopted, would have the effect of extending the Treasury Department’s borrowing authority for at least a month.
Boehner said the measure establishes House Republicans as responsible actors who are committed both to avoiding default and to getting the debt under control.
“Our goal here is to not default on our debt. Our goal here is to get ourselves on the sustainable path from a fiscal standpoint,” Boehner told Bloomberg TV on Tuesday. “I think doing a debt prioritization bill makes it clear to our bondholders that we’re going to meet our obligations.”
Democrats have excoriated the measure, not least because it would guarantee payment to Chinese creditors, for example, while offering no such protection for, say, military salaries. The White House this week threatened to veto the measure and accused House Republicans of “political gamesmanship.”
Boehner defended the bill in the Bloomberg interview. “Listen,” he said. “Those who have loaned us money, like in any proceeding, if you will, court proceeding, the bondholders usually get paid first. Same thing here.”
The measure is likely to pass the House but has no chance in the Democrat-controlled Senate. House leaders, meanwhile, are casting about for a more promising strategy.
A leading option: Tie the debt limit to tax reform, offering periodic increases in borrowing authority in exchange for progress toward a simpler tax code with lower rates.
No decision has been made, however, and House Republicans plan to gather next week for the first of several major strategy sessions.