Democrats, Republicans set to tangle on debt-limit increase

Newly elected Republicans are sticking to their campaign messages of cutting government spending and debt by threatening to block an increase in the federal government's debt ceiling. 

The first showdown on spending and debt could come sometime in February on a vote on whether to increase the amount of debt the federal government can assume. 

Sens.-elect Rand Paul (R-Ky.) and Mike Lee (R-Utah) are just two of those arguing against an increase in the debt ceiling, a possibly dangerous prospect for the U.S. and global economy. Sen.-elect Ron Johnson (R-Wis.) also is likely to join the chorus. 

"I would vote against raising the national debt ceiling," Lee said recently on PBS. "Again, this is about mortgaging the future of unborn generations of Americans. It's a form of taxation without representation. I don't think we can do that."

The question usually moves through Congress with broad agreement, mainly because the Treasury needs the leeway to pay its bills and maintain its credit rating to keep the U.S. and the global economy churning along. 

Without the increase, the Treasury will be unable to issue more debt — the economic fallout could be dramatic, with panic in U.S. financial markets that could affect global trading. 

But Lee argued that there are alternatives to avoid a government shutdown. 

"I don't want a government shutdown. I don't think anyone does. I would like to see some form of continuing resolution that would allow spending to continue at current levels," he said.

"But, if we had to do that in a way that enabled us to avoid having to raise the national debt ceiling, we might have to consider across-the-board cuts being built into the automatic continuing resolution."

Although Republicans have said they don't want to shut down the government, it seems clear they want to extract concessions on spending cuts from Democrats in exchange for agreeing to let the debt limit rise. 

Sen. Jim DeMint (R-S.C.) also has said he won't vote for raising the debt ceiling unless it's combined with a plan to balance the budget, including returning to fiscal 2008 spending levels and repealing healthcare reform. 

Senate Minority Leader Mitch McConnell (R-Ky.) said he expects some kind of agreement that ties a reduction of spending to the debt-limit increase. 

"I think it will not be without some strings attached if it happens, because they're going to have to seriously address spending and debt," he told Fox News recently. 

Whether lawmakers can work fast enough to get an agreement on the table as early as February remains to be seen. Republicans haven't provided a list of specific cuts, and while they've gone after earmarks as one way to reduce wasteful spending, it only represents about 1 percent of the total federal budget. 

Sen. Tom Coburn (R-Okla.) has suggested there needs to be an agreement to cut $300 billion in spending before he'd end a filibuster on the debt ceiling.

Speaker-to-be John Boehner (R-Ohio) didn't seem prepared to shut down the government, but acknowledged any agreement would likely be coupled with a promise for spending cuts. 

"We're not quite sure when we're going to face this increase in the debt limit, but when we do, we'll be ready to meet our obligations," he told ABC News.