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Debate ramps on debt limit with no consensus on way forward
The debate over raising the debt limit will gain more urgency Monday, after the federal government officially hits the $14.3 trillion ceiling.
Even though the government has the tools to stave off a default of government debts until August, lawmakers this weekend were ramping up the debate, laying out demands and issuing warnings about the $14.3 trillion debt.
House Speaker John Boehner (R-Ohio) kept up his debt limit balancing act Sunday. In an interview with CBS's "Face the Nation," he continued to say that the ceiling will ultimately have to be raised but maintained it would be "totally irresponsible" to do so without enacting major spending reforms as part of the deal.
"No gimmicks, no automatic clawbacks, I've had it with all of that," he said. "We don't have to wait until the eleventh hour, but I am not going to walk away from this moment."
Senate Republican Leader Mitch McConnell (R-Ky.) hit a similar tone, calling the debate a "great opportunity" to tackle big spending issues.
"Rather than thinking of this as a crisis, I think of this as an opportunity to come together," he said on CNN's "State of the Union."
He called for a two-year spending cap, as well as cuts to both discretionary and mandatory spending in the near and long-term.
Appearing on the same program, House Budget Committee Chairman Paul Ryan (R-Wis.) echoed a call Boehner made Monday, when he said any increase to the debt limit must be paired with cuts of equal or larger size.
"We’re saying cut at least a dollar’s worth of spending, because that is the necessary thing to do to stave off the debt crisis," he said.
One of the biggest questions in the debt limit debate has been how GOP leaders will be able to wrangle rank-and-file members, including many members of the large freshman class that campaigned against raising the debt limit. Some members are questioning whether the ceiling really needs to be raised by Aug. 2, as Treasury Secretary Timothy Geithner has warned — or if it needs to be raised at all.
South Carolina Gov. Nikki Haley (R) gave a taste of Tea Party thinking Sunday, telling ABC's "This Week" that she opposed an increase to the debt limit.
"The very first thing they need to do is, is make sure that they stop raising the debt," she said. "They need to make sure that they balance their budget like every other state in the country, and we've got to get control of our spending. It is chaos in D.C. and they need to stop.”
While Boehner maintained that the limit will eventually have to go up, he said he understood those who were more skeptical.
"I understand the doubts and the questions, but at some point it's clear to me that we have to raise the debt ceiling," he said.
As the GOP lines up demands for raising the debt ceiling, Democrats were ramping up the doom and gloom about what would happen if it isn't raised.
President Obama said failing to raise the debt ceiling could lead to a worse financial crisis than the one the nation experienced in 2008.
"If investors around the world thought that the full faith and credit of the United States was not being backed up, if they thought that we might renege on our IOUs, it could unravel the entire financial system," Obama said at a town-hall meeting hosted by CBS last week and released Sunday.
"We could have a worse recession than we already had, a worse financial crisis than we already had."
Geithner struck a similar dire tone Friday, in a letter he sent to Sen. Michael Bennet (D-Colo.), he warned that any default, no matter how long it lasted, would do "irrevocable damage" to the nation's economy and would "likely push us into a double-dip recession."
"This would be an unprecedented event in American history. A default would inflict catastrophic, far-reaching damage on our nation's economy, significantly reducing growth, and increasing unemployment," he told the senator, who had asked Geithner and Federal Reserve Chairman Ben Bernanke what would happen if Congress did not raise the debt limit.
"Playing politics with the debt limit would rattle the capital markets, blow an even bigger hole in our deficit and would likely throw our economy into another deep recession," Bennet said on Saturday. "That is unacceptable, especially since Congress has the power to prevent it."
"We better be careful," added Sen. Dick Durbin (D-Ill.) on "Fox News Sunday. "This debt ceiling is a critical decision. It's about the reputation of the United States and the economy. And if we play games with it or play politics with it, and default on our national debt, we could plunge this country back in a recession with even deeper unemployment. Nobody wants the see that happen."
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