(Bloomberg) -- House Republicans plan to vote Jan. 23 on a three-month extension of U.S. borrowing authority in an effort to force the Democratic-led Senate to adopt a budget plan.
We are going to pursue strategies that will obligate the Senate to finally join the House in confronting the governments spending problem, Speaker John Boehner of Ohio said in a statement today at the end of the partys private policy retreat at a resort near Williamsburg, Virginia.
Majority Leader Eric Cantor of Virginia said in a statement that their plan is to block pay for members of Congress if the House or Senate doesnt adopt a budget by the end of the proposed debt-limit increase. A leadership aide said Republicans are dropping their insistence that a short-term extension be accompanied by a dollar-for-dollar spending cut.
The Treasury Department has said the U.S. will exceed its $16.4 trillion borrowing authority sometime from mid-February to early March. Congress faces two other fiscal deadlines in the next 90 days, and House Republicans plan to use those debates -- rather than the one over the debt limit -- to try to force spending cuts.
Financing for government agencies is scheduled to lapse March 27, and lawmakers must pass new spending or face a government shutdown. Also in March, Congress will confront the $110 billion in automatic spending cuts, half from defense, that were postponed in the Jan. 1 tax deal.
Republicans will continue to seek spending reductions as part of a long-term increase in the debt limit, said the Republican leadership aide, who spoke on condition of anonymity.
President Barack Obamas spokesman, Jay Carney, said today in a statement, We are encouraged that there are signs that congressional Republicans may back off their insistence on holding our economy hostage to extract drastic cuts in spending.
Congress must pay its bills and pass a clean debt limit increase without further delay, Carney said.
Senate Majority Leader Harry Reids spokesman, Adam Jentleson, said in a statement that the House must pass a clean debt-limit increase. He didnt address Cantors statement about requiring members of Congress to forfeit their pay if the chambers dont adopt a budget.
Senate Republican leader Mitch McConnell of Kentucky said in a statement that the lack of a Senate-passed budget in the last several years was a shameful record that needs to end this year.
Both chambers of Congress should lay out a framework of future government spending, Representative Kevin McCarthy said today in an interview with Bloomberg Televisions Capitol Gains program airing Jan. 20.
You cant get out of this without passing a budget, McCarthy of California said.
Political divisions in Congress pose limits to the ability of Republicans to achieve their long-term goals of deep cuts in spending, Budget Committee Chairman Paul Ryan of Wisconsin told reporters at the retreat yesterday.
Attaching a requirement that the Senate pass a budget to a short-term debt-limit extension would require Senate Democrats to spell out their spending plans.
Ryan said Republicans want a two-way discussion between Democrats and Republicans and out of that hopefully some progress being made on getting this deficit and debt under control.
The last time the Democratic-led Senate adopted a budget was in April 2009. The Senate and House are supposed to pass budget resolutions early each year to set a spending framework, though there is no enforcement mechanism. Without a budget resolution, appropriations bills allocate money for the federal government.
Leaders said the tactic of short-term debt-limit increases was used in the 1980s during the presidencies of Ronald Reagan and George H.W. Bush as a prelude to broader agreements on spending cuts.
No one is talking about default, no one wants to default, South Carolina Republican Mick Mulvaney, who voted against the 2011 debt-ceiling deal, said in an interview today with Bloomberg Television. There is a lot of support growing among the rank and file for a short-term debt limit, he said.
The comments by Mulvaney and Ryan reflected the new political realities following President Barack Obamas re- election that are spurring House Republicans to reassess their goals.
If you get a little bit of reform for a little bit of extension of borrowing authority, that sounds like a pretty good deal, Mulvaney told reporters. If you can figure out a way to get little types of reform, little fixes for small extensions, I dont find that objectionable.
Obama has said he wont negotiate the terms of a debt-limit legislation the way he did in 2011, and he is demanding more tax revenue to accompany further spending cuts. House Speaker John Boehner, an Ohio Republican, has said that any increase in the debt ceiling would have to be accompanied by commensurate spending cuts.
Louisiana Republican John Fleming said passing one or a series of short-term extensions may be effective in persuading Obama to discuss spending cuts because he cant get onto other agendas that he sees as important like immigration and gun violence while we are still wrangling every three months on debt ceilings.
While the debt limit has been raised periodically since its creation in 1917 -- with Congress increasing or revising it 79 times, including 49 times under Republican presidents, since 1960 -- Republicans are girding for a fight with Obama and Senate Democrats over tying an increase to spending reductions.
The Treasury Department has said that it expects to run out of emergency measures to prevent a breach of the current debt limit between mid-February and early March.
Investors in U.S. Treasury bonds, who most directly bear the risk of a government default, havent shown alarm.
The last time Congress fought over raising the ceiling, Obama signed an increase on Aug. 2, 2011, the day the Treasury Department warned that U.S. borrowing authority would expire. Standard & Poors cut the nations credit rating. Still, yields on 10-year U.S. Treasury notes declined to 2.56 percent on Aug. 5 and have continued to drop. The yield fell four basis points, or 0.04 percentage point, to 1.84 percent at 5 p.m. in New York, according to Bloomberg Bond Trader pricing.
The worst thing for the economy is for this Congress and this administration to do nothing to get our debt and deficits under control, Ryan said yesterday. We think the worst thing for the economy is to move past these events that are occurring with no progress made in the debt and deficit.
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