Debt limit complicates deficit talks

President Obama and congressional Republicans on Wednesday ratcheted up their threats on an increase in the debt ceiling, complicating fiscal-cliff negotiations that had already stalled over taxes.

The president, during a meeting with business leaders at the White House, issued a stern warning to Republicans not to try to use a debt-limit vote as leverage to extract concessions on spending cuts, as they did in 2011.

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“I want to send a very clear message to people here: We are not going to play that game next year,” Obama said. “If Congress in any way suggests that they’re going to tie negotiations to debt-ceiling votes and take us to the brink of default once again as part of a budget negotiation — which, by the way, we had never done in our history until we did it last year — I will not play that game. Because we’ve got to break that habit before it starts.”

In delivering his message, the president cited reports that if a comprehensive deal isn’t reached in the next few weeks to avert the fiscal cliff, Republicans might pass an extension only of middle-class tax rates and set up a debt-ceiling fight early next year. The Treasury Department has said it will need additional borrowing authority by mid-February.

The White House is asking Congress to make permanent a process first proposed last year by Senate Republican Leader Mitch McConnell (Ky.), in which the president could authorize an increase in the debt ceiling unilaterally and Congress could only block it with the two-thirds majority needed to override a presidential veto.

The process was used in the 2011 Budget Control Act, but when Treasury Secretary Timothy Geithner proposed enshrining it permanently last week, McConnell reportedly laughed.

The president’s warning came on another day of stalemate in the fiscal-cliff talks, as Republicans implored Obama to respond to their proposal with a counteroffer. The White House has said it will not make another offer until the GOP agrees to higher tax rates for the wealthy, and Geithner said in a television interview Wednesday that the administration was “absolutely” prepared to go over the fiscal cliff if Republicans did not concede that point.

“All we need is for the president to sit down and talk specifics and get serious,” House Majority Leader Eric Cantor (R-Va.) told The Hill. “We want a meeting. We want some kind of response, something to the specifics that we put on the table.”

Speaker John Boehner (R-Ohio) and Obama spoke by phone Wednesday afternoon, an aide for the Speaker said, though he declined to provide details of their conversation. 

Republican leaders readily acknowledge Obama has the upper hand politically, but they have accused him of not negotiating in good faith.

“Despite dancing in the end zone, which he’s doing, he keeps moving the goalposts,” said Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee. “I think they’re on a different timeline than we are. Because I think the longer you wait, the more uncertain it gets, and I don’t think that’s helpful to the economy.”

Boehner said he told Obama shortly after the election that if he wanted an increase in the debt ceiling included in a fiscal-cliff deal, it would come with “a price tag.”

“Giving President Obama, and every future president, authority to spend infinite sums of borrowed money is something the American people wouldn’t stand for, and neither would members of Congress in either political party,” Boehner spokesman Michael Steel said.

But when Boehner and other House GOP leaders sent the White House a $2.2 trillion counteroffer on Monday, they included no proposal on the debt limit.

Aides say the Speaker is open to negotiating the next debt-limit hike this month but is waiting for Obama to make a specific debt-ceiling request that has a chance of passing the House. Boehner has said he wants to keep to a principle he established in 2011, in which the level of spending cuts and reforms must match or exceed the amount of additional borrowing Congress authorizes.

Under that rubric, Boehner’s $2.2 trillion proposal could be linked to a debt-ceiling increase that carries the nation through the end of 2014 or beyond, using debt projections from the Bipartisan Policy Center.

Yet the Speaker is also cognizant that asking for any increase in the debt ceiling remains a heavy political lift in the House Republican Conference, which is one reason he may have held it out of a proposal that already included an offer of $800 billion in new tax revenue.

Senior Republicans have been reluctant to even discuss the debt ceiling in the context of the fiscal-cliff talks. “I don’t want to get into that one,” Camp said as he ducked into a meeting Wednesday.

Conservatives have been adamant that the debt ceiling be kept separate. “It has nothing to do with the fiscal cliff,” freshman Rep. Raul Labrador (R-Idaho) said.

Another conservative freshman, Rep. Tim Huelskamp (R-Kan.), said the debt ceiling “should be our leverage for the next two years.”

“If Republicans trade away a debt-ceiling issue and agree with the president that we shouldn’t have a debt ceiling, then we might as well close up shop,” he said. “Because we’re done here for the next two years.”

Leading Democrats — including former President Clinton — have suggested Obama should increase the debt ceiling on his own authority, citing the 14th Amendment to the Constitution. The White House reiterated it is not considering that move, which would likely provoke a legal battle with Congress.

Republicans in both the House and Senate moved to issue formal rejections of the president’s proposal, via McConnell’s plan, for a permanent increase in the debt limit. Reps. John Fleming (R-La.) and Cynthia Lummis (R-Wyo.) were collecting signatures on a resolution reaffirming that Congress has the authority under the Constitution to borrow money and should “not cede this power to the president.”

“This is an unprecedented power-grab by this president, and the Congress needs to put its foot down,” Lummis said. 

Across the Capitol, Sen. Rob Portman (R-Ohio) was organizing a letter to be sent to the White House arguing the debt limit has historically given lawmakers the chance to get the budget under control.

“For Congress to surrender its control over the debt limit would be to permanently surrender what has long provided the best opportunity to enact bipartisan deficit-reduction legislation,” Portman wrote. 

— Justin Sink and Bernie Becker contributed.


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