Senate GOP Forming Plan to Tie Up Debt Limit, Again

A Republican strategy to demand another round of spending cuts could set up an election-year fiscal crisis.

U.S. Sen. John Barrasso (R-WY) (L) talks with U.S. Sen. James Risch (R-ID) (R) during a markup meeting of the Senate Energy and Natural Resources Committee March 21, 2013 in Washington, DC. The committee met to vote on the nomination of Sarah Jewell for the position of Secretary of the Interior.
National Journal
Michael Catalini
Jan. 16, 2014, 3:23 p.m.

Sen­ate Re­pub­lic­ans are piecing to­geth­er a plan to ex­tract more con­ces­sions from the White House in ex­change for a debt-lim­it in­crease, re­viv­ing a strategy that took the coun­try to­ward the brink of de­fault just three months ago.

While the Obama ad­min­is­tra­tion is already sound­ing alarms about the debt ceil­ing — Treas­ury Sec­ret­ary Jac­ob Lew told Con­gress on Thursday that the coun­try could hit the bor­row­ing lim­it as soon as Feb­ru­ary — Re­pub­lic­ans ap­pear ready to de­mand an­oth­er round of spend­ing cuts, ac­cord­ing to law­makers.

“You can’t do these things without get­ting something in re­turn,” said Sen. James Risch, an Idaho Re­pub­lic­an. “We’re bor­row­ing still over $3 bil­lion a day. This is non­sense. It can’t go on.”

Re­pub­lic­ans will meet be­hind closed doors early next month to draft the debt-lim­it strategy and map out oth­er elec­tion-year le­gis­lat­ive pri­or­it­ies. Part of the meet­ing, ac­cord­ing to law­makers, will be aimed at find­ing a way to cir­cum­vent Ma­jor­ity Lead­er Harry Re­id’s strategy to flatly avoid ne­go­ti­at­ing on the debt ceil­ing, which was suc­cess­ful in the last round.

The debt-lim­it is­sue has be­come a per­en­ni­al stick­ing point for Con­gress. Be­fore the shut­down, Re­pub­lic­ans planned to force a dis­cus­sion over spend­ing cuts and Minor­ity Lead­er Mitch Mc­Con­nell reg­u­larly cited ex­amples of budget-cut­ting meas­ures at­tached to the debt lim­it. But the 2013 shut­down weakened Re­pub­lic­an lever­age.

This time, Re­pub­lic­ans again smell an op­por­tun­ity to cut spend­ing. The deal passed and signed in­to law in Oc­to­ber sets the dead­line for an in­crease at Feb. 7, but the Treas­ury can take so-called ex­traordin­ary meas­ures, which Lew said Thursday could ex­tend that dead­line “through late Feb­ru­ary or early March.”

He also warned that wait­ing un­til the last minute to ex­tend the $17 tril­lion lim­it would dam­age the eco­nomy.

Re­pris­ing their ar­gu­ments from the fall, Re­pub­lic­ans re­ject the idea that ne­go­ti­at­ing on the debt lim­it is like play­ing with fire. “The debt ceil­ing is a dead­line,” said Sen. John Ho­even, a North Dakota Re­pub­lic­an. “We need to use it as a dead­line to find sav­ings and make re­forms that help us get the debt and de­fi­cit un­der con­trol.”

What spe­cific­ally Re­pub­lic­ans will ask for is still un­clear, but law­makers have sug­ges­ted re­du­cing reg­u­la­tions and re­form­ing the tax code as pos­sible bar­ter­ing chips. Sen. Kelly Ayotte, a New Hamp­shire Re­pub­lic­an, said her col­leagues hadn’t formed a strategy yet, but that there’s a con­sensus in the GOP con­fer­ence that law­makers will force the is­sue.

“I think there’s a gen­er­al feel­ing — un­der­stand­ably so — that when it comes to the debt ceil­ing, we should be look­ing at the un­der­ly­ing prob­lem and do­ing something about it,” she said.

It’s up to Mc­Con­nell and the con­fer­ence lead­ers to chart the course on the debt ceil­ing, rank-and-file mem­bers say. “The lead­er­ship does the ne­go­ti­at­ing on it,” Risch said. “We al­ways urge them to take that track and that is to get some cuts.”

The fight comes against the back­drop of an elec­tion year in which Re­pub­lic­ans have a real chance to take the ma­jor­ity. Tak­ing the debt lim­it down to the wire could be seen as polit­ic­al vul­ner­ab­il­ity, es­pe­cially if it af­fects the eco­nomy. But Re­pub­lic­ans down­play those con­cerns.

“I think this is a dis­cus­sion we’ve had in the past,” Ayotte said. “I’m sure we’ll con­tin­ue to have it on this is­sue.”

Some Re­pub­lic­ans, like Sen. Lind­sey Gra­ham of South Car­o­lina, will face their toughest con­tests against fel­low Re­pub­lic­ans. For them, a no vote on hik­ing the debt lim­it could be the safest route.

“I’ve been think­ing about this a lot. I know we need to raise the debt ceil­ing but we gotta fi­nally ad­dress what got us in debt,” Gra­ham said. “I’m gonna have a really hard time sup­port­ing an in­crease in the debt ceil­ing if we don’t have some struc­tur­al changes to the sys­tems that are push­ing us to be­com­ing Greece.”

Fore­shad­ow­ing Re­id’s at­tacks against their po­s­i­tion, Re­pub­lic­ans cede that the debt ceil­ing will be raised, but say it’s a mat­ter of ne­go­ti­ation as to how and when that will hap­pen. “At the end of the day the debt ceil­ing will be raised,” said Sen. Mike Johnanns, a Neb­raska Re­pub­lic­an. “It’s just the real­ity of what we deal with.”

Jo­hanns, who worked with Sens. Susan Collins of Maine and oth­ers in Oc­to­ber to craft a deal that ul­ti­mately failed to break the im­passe, sug­ges­ted he’s ready to cir­cum­vent the ma­jor­ity lead­er if Re­id won’t deal with them.

Re­pub­lic­ans would be all too happy to cut Re­id out of the pro­cess — like when Vice Pres­id­ent Joe Biden cut a deal with Mc­Con­nell over the fisc­al cliff in late 2012. Lately, Re­id has drawn Re­pub­lic­an ire be­cause he over­saw a Sen­ate rules change ex­ped­it­ing the con­firm­a­tion pro­cess.

“There prob­ably will be some ne­go­ti­ation,” Jo­hanns said. “Prob­ably not with Re­id, be­cause he deals him­self out of these things.”

Catherine Hollander contributed to this article.
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