Schumer: It's time for Boehner to have 'adult moment' on debt limit

Speaker John Boehner (R-Ohio) should act like an adult and assure credit markets the U.S. will not default on its debt limit, Sen. Charles Schumer (D-N.Y.) said Monday. 

In comments meant to counter Boehner's Monday night speech to the New York Economic Club, Schumer quoted Boehner as saying after the 2010 election that the debt ceiling would be the first “adult moment” for the new House majority. 

“Mr Boehner needs to have that adult moment right here and now. ... This next speech by the Speaker will be a 'litmus test' on whether House Republicans plan to finally approach the debt ceiling as adults. So far many of them have not been responsible about this issue at all,” Schumer told reporters in a press call.

Republicans are demanding spending cuts and reforms from the White House and congressional Democrats in exchange for a vote to raise the $14.3 trillion debt limit. Treasury Secretary Timothy Geithner has said the nation needs to raise the debt ceiling this month, but that his agency can take measures to prevent the U.S. from actually hitting the ceiling until Aug. 2. 

But Schumer said the House should move to raise the $14.3 trillion debt ceiling well before Aug. 2., and that if there is no action by around July 15, markets could start to react badly.

In his speech, Boehner should provide "unwavering reassurance" to credit markets that the U.S. will not default on its debt obligations, Schumer said.

Schumer handles political messaging for Democrats, and he and Boehner's office have increasingly gone toe-to-toe on budgetary issues. In response to Schumer's comments, a spokesman for Boehner on Monday said Schumer and Democrats want "a blank check" to keep running up the deficit.

"The American people flatly reject Sen. Schumer's call for a blank check for the Democrats who run Washington to keep their spending spree going. There's no way an increase in the debt limit will pass without real spending cuts and reforms," said Michael Steel, a spokesman for Boehner. 

Separately, a GOP aide pointedly noted that a number of Democrats, including Senate Budget Committee Chairman Kent Conrad (D-N.D.) and Sens. Joe Manchin (D-W.Va.), Mark Pryor (D-Ark.) and Mark Udall (D-Colo.), have demanded deficit reduction in exchange for raising the debt ceiling.

Polls show the idea of raising the debt ceiling is unpopular with voters, making the vote difficult for members of both parties. 

Threatening to have the U.S. default is much more dangerous than threatening to shut down the government, Schumer said. A U.S. default on its bond obligations could lead to another Great Depression, he said.

Schumer enlisted Roger Altman, the chairman of investment advisory firm Evercore Partners and a former deputy Treasury secretary under President Clinton, in making his point during a conference call for reporters.

Altman noted that the U.S. hasn't defaulted on its debt since 1789, and warned that markets could crash if it begins to look like Congress will allow a default.

He recounted how close the global financial system came to a complete “meltdown” in 2008.

“A U.S. default could bring on similar financial terror,” he said.

Altman said that a proposal by some Republicans, led by Sen. Pat Toomey (R-Penn.) to prioritize U.S. debt payments in the event the debt ceiling is exceeded, so that bondholder are paid before other creditors, would be unworkable in practice and would also fail to calm the markets.

" The markets would not find that credible ," he said.

Schumer said Democrats are open to tying deficit reduction to the debt-ceiling bill. He said he is open to a suggestion by Senate Majority Leader Harry Reid (D-Nev.) to enact debt triggers that could force spending cuts or tax increases. A rival Republican proposal for a spending cap is “impossible” to enact since it ignores revenue, he said.

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