Pelosi: Markets might have to plummet before GOP acts on debt limit

House Minority Leader Nancy Pelosi (D-Calif.) warned Thursday that it might require financial turmoil before Republican leaders agree to raise the nation’s debt ceiling.

“I don’t need to see markets drop 400 points [to be convinced],” Pelosi said during a press conference at the Capitol, “but Republicans may need to see markets drop 400 points.”

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Pelosi noted that it took a stock market free-fall, in late 2008, to convince House lawmakers to rally behind the Troubled Asset Relief Program (TARP), which President George W. Bush had championed to stabilize a teetering Wall Street.

When the House shot down the initial TARP bill, the Dow fell 777 points. Four days later, the House passed the bill, with 57 members switching their votes to yes.

“We voted for the TARP, not because we approved of how we got there, or the cost that it would be, but because it had to be done,” Pelosi said. “And here we are again, so we’ll see what sense of responsibility people have about doing [the debt-ceiling].”

Adding to the urgency, Moody’s Investors Service, the powerful credit-rating agency, warned Wednesday that it might downgrade the United States’s triple-A rating if Congress doesn’t raise the debt ceiling within the “coming weeks.” 

Last week, Standard & Poor’s sent Democratic senators a similar message, warning that it could reduce the U.S. credit rating if the government is forced to prioritize payments because Congress couldn’t reach a deal.

The Treasury Department has given lawmakers an Aug. 2 deadline.

Pelosi on Thursday repeated her earlier praise for Senate Minority Leader Mitch McConnell (R-Ky.), who floated legislation this week empowering President Obama to raise the debt ceiling without congressional approval. Pelosi has not endorsed that proposal, saying the details are better left for Senate lawmakers to scrutinize. But she applauded McConnell’s “recognition that we must lift the debt ceiling.”

“For that reason it has … value,” she said. “Everyone who’s concerned about lifting the debt ceiling is saying, ‘Bravo for Sen. McConnell saying this must be done.’”

Rep. Peter Welch (D-Vt.) is urging another Plan B in the form of a clean debt-ceiling hike to buy negotiators more time to hammer out a deficit-reduction deal.

Citing the analyst’s warnings, Welch cautioned that Congress’s window to act is closing quickly. It will be too late, he warned, only “when the bond market decides it is.”

“It won’t tell us, but we’ll know,” he said.

Welch led the charge for a clean extension in May, rallying the support of 114 House Democrats.

Leaders from both parties huddled again with Obama on the issue Thursday afternoon, marking the sixth such meeting over the last eight days. The lawmakers are trying to break an impasse over whether tax hikes should be included as part of the package.

During Wednesday’s gathering, Majority Leader Eric Cantor (R-Va.) urged a series of temporary debt-ceiling hikes, with deficit-reduction plans to follow.

Pelosi on Thursday reiterated her opposition to that strategy, arguing that businesses, consumers and beneficiaries of federal programs are looking for more stability than such a Band-Aid would provide.

“Any suggestion that says we’re going to end this for a little while and then we’re going to start all over again I just think [is] not worthy of the American people,” she said. 

Obama has also rejected a short-term approach.

Cantor has suggested that Obama was disrespectful of Republicans when the president left the room abruptly at the end of Wednesday’s meeting, a notion Pelosi dismissed outright.

“I just don’t understand what the problem is,” Pelosi said. “That’s how meetings with presidents end. You don’t leave first, the president leaves first.”

Pelosi also renewed her blanket opposition to any benefit cuts in the major entitlement programs as part of a debt-ceiling package.

“Every dollar we spend in the federal government should be subjected to the harshest scrutiny,” she said. “But not to cut benefits for seniors and others who depend on Medicare and Social Security. 

“That,” she added, “is our fight.”

House Democrats feel like they have a good deal of leverage in the debt-ceiling debate, because GOP leaders will need dozens of Democratic votes to push the bill through the lower chamber.

Rep. Rob Andrews (D-N.J.) estimated Thursday that there are 80 House Republicans who will oppose even a $1 debt-limit increase.

The White House on Thursday floated the idea that the negotiators might be whisked away to the president’s Maryland retreat at Camp David for the weekend,  but the strategy drew immediate disapproval from both Pelosi and Speaker John Boehner (R-Ohio).

“The Speaker has told the White House he sees no need to go to Camp David this weekend,” Boehner spokesman Michael Steel said Thursday in an email.

Pelosi agreed.

“The only thing I hope he doesn’t ask us to do is go to Camp David,” Pelosi said. “I don’t want it to be a place where the president has to listen to some of this stuff.”

Updated at 8:02 p.m.