By Russell Berman - 04/29/11 12:50 PM EDT
House Republicans are considering a plan to grant only incremental increases to the federal debt limit in a bid to extract more concessions on spending cuts and budgetary reform from the Obama administration.
The idea has a champion in Grover Norquist, the conservative activist and president of Americans for Tax Reform, who says he is “building allies” in the House Republican Conference to push for extending the debt limit every two months.
The proposal has gained traction with some members of the conservative Republican Study Committee, who plan to bring it up in “listening sessions” scheduled by party leaders for after the Easter recess.
“It is the only leverage that we have over a Senate and a president that is seemingly unconcerned about the over-spending,” said freshman Rep. Tim Huelskamp (R-Kan.), who said he would not support any bill that allows borrowing past Sept. 30, the end of the fiscal year. “I would support a much shorter time-frame.”
A push for short-term debt-limit increases is likely to face a wall of opposition with Senate Democrats and the administration, but it would set a significant marker for Republicans as they begin negotiations. The Treasury Department has not specified how high it wants the debt ceiling raised — though Treasury Secretary Timonthy Geithner recently suggested a ballpark of $2 trillion — saying it is up to Congress to decide.
Republican leaders have given little indication of their thinking, beyond suggesting that the level of the debt ceiling would be linked to the extent of spending reforms in the bill.
“Leadership is listening,” Norquist said.
GOP leaders are insisting that an increase in the $14.3 trillion borrowing limit be paired both with immediate spending cuts and structural reforms. They have described the debt-ceiling vote as one of three “bites at the apple” Republicans have on spending, along with the 2011 spending bill and the 2012 budget. The Treasury Department has said the ceiling must be lifted by July 8 to avoid a first-ever default by the U.S. government.
Asked about the idea for short-term increases, a House GOP leadership aide said: “All options are under consideration, but the bottom line is that we will not raise the debt limit without immediate spending cuts and binding budget-process reforms.”
Norquist’s proposal would multiply the bites at the apple, under the thinking that winning a number of “reasonable” concessions from Obama and Senate Democrats would be easier than a single major reform. The message, he said, is that “Obama is so undisciplined that he needs a very short leash.”
Yet Republicans might find a limited political upside to the incremental approach because it would force lawmakers to repeat several times an unpopular vote that many are already dreading. Democrats would surely escalate their accusations that the GOP is holding hostage the “full faith and credit of the U.S. government.” And the prolonged political fight over the debt ceiling would consign the financial markets to an extended period of uncertainty, which Republicans have warned against in the past.
“If the Republicans say, 'Here are the 20 things we want … and we will trade them for every two months we give you of debt ceiling,' I think the markets would look at those things and say, 'Every one of them makes for a stronger America,' ” Norquist said.
A key question for both Republicans and Democrats is whether the size of the upcoming debt-limit increase would force Congress to approve another one before the 2012 elections. Huelskamp argued that an extension past 2012 would be a nonstarter because it would represent “the single largest expansion of debt in the history of the world.”
He said he did not know where the leadership stood on the incremental approach, but predicted it would be “very popular with many of my freshman colleagues.”
An aide with the Republican Study Committee said a series of short-term increases is one idea the panel’s members are considering but there is no consensus on a proposal yet. The RSC membership constitutes about two-thirds of the Republican Conference. The committee’s chairman, Rep. Jim Jordan (Ohio), has also not settled on a preferred approach, the aide said.
The Treasury Department declined comment on the Norquist plan, and a spokesman for House Minority Leader Nancy Pelosi (D-Calif.) said, "Democrats are committed to reducing the deficit responsibly and ensuring America’s economic stability, but we will not engage with an organization dedicated to ending Medicare as we know it.”
Top Republicans have avoided specifics in discussing what they are likely to demand from Obama, but a GOP leadership aide said the debt-limit increase must include “real, actual cuts that get enacted into law ... not the promise of future cuts by a future Congress.”
That could include a hard cap on discretionary spending in conjunction with cuts to mandatory programs, the aide said. One possibility is reductions to Medicaid outlined in the GOP-passed budget authored by Rep. Paul Ryan (R-Wis.), which have generated somewhat less opposition than the proposed reforms to Medicare. Another option is reducing the size of the federal workforce, through attrition rather than layoffs, the aide said.
The proposal is likely to include a Republican version of a trigger that, the aide said, “would ensure that real reforms are enacted by a date certain and that the size of the debt-limit increase will be directly tied to the amount of real savings that are actually enacted within that period.” Obama and Senate Democrats have also advanced a trigger proposal, but theirs would be tied to the deficit, rather than spending, and could lead to tax increases that Republicans oppose.
Some conservatives are pushing for a balanced-budget amendment to be attached to the debt-ceiling bill, but GOP leaders have been cool to the idea because ratification through the state legislatures would take years. Majority Leader Eric Cantor (R-Va.) has said the GOP needs to achieve “something that gets done this year.”
The Club for Growth is one conservative group advocating the balance-budget amendment, but its vice president for government affairs, Andrew Roth, said the club is open to the idea of short-term increases in the debt ceiling paired with spending cuts “if consideration of the balanced-budget amendment in the Congress needs more time.”