House Speaker Rep. John Boehner, R-Ohio, told reporters Tuesday night that not one single Republican would vote to increase revenue by curbing tax expenditures right now and that their focus is solely on cutting spending.
Speaking at a press conference on proposed legislation to suspend the debt limit through May 18, Boehner said, “Nobody on our side is interested in raising taxes on the American people. It’s time to deal with the serious problem we have, which is spending.”
Meanwhile, the White House announced earlier in the day that it does not oppose the debt limit suspension, helping to clear the path for Congress to approve it.
The bill, H.R. 325, “lifts the immediate threat of default and indicates that congressional Republicans have backed off an insistence on holding the Nation’s economy hostage to extract drastic cuts in Medicare, education, and other programs that middle-class families depend on,” the Office of Management and Budget said in a release as the House Ways and Means Committee held a hearing on the debt ceiling.
“For these reasons, the administration would not oppose a short-term solution to the debt limit and looks forward to continuing to work with both the House and the Senate to increase certainty and stability for the economy,” the OMB said. “Instead of short-term management of self-inflicted fiscal crises, the president believes there is now an opportunity to strengthen the economy by putting the nation on a sounder fiscal path.”
The Treasury Department has estimated that the federal government is currently on track to hit the $16.4 trillion statutory debt limit as early as February 15, but even after using extraordinary measures, such as suspending sales of State and Local Government Series securities (SLGS) used by muni issuers, to delay the date the limit would be reached.
The House is scheduled to vote Wednesday on legislation to suspend the debt ceiling, but Republican leaders could not say Tuesday night if they will have enough votes to pass it.
Republicans hope the bill will force Senate Democrats to negotiate a budget resolution, which they haven’t passed in nearly four years. If lawmakers in both chambers can’t agree to a budget by April 15, their salaries will be held in escrow, under the legislation, prompting Republican leaders to repeat “No budget, no pay” at the press conference.
“We need to responsibly manage our finances but that includes not only the debt limit increase but that also means getting a handle on the long term spending that is crushing the economy,” Sage Eastman, a spokesman for House Ways and Means Committee chairman Rep. Dave Camp, R-Mich., said earlier in the day. “This is a way to at least get the Senate to take that first step towards enacting a budget.”
On Sunday, Sen. Chuck Schumer, D-N.Y. told NBC’s Meet the Press that the Senate will pass a budget this year.
Eastman told reporters Tuesday that it is possible that tax reform could be part of the budget process or could be accomplished outside of a budget. He also indicated that it is unclear whether Republicans would agree to a 28% cap such as the one President Obama proposed in his fiscal 2013 budget.
Temporarily suspending the federal government’s borrowing authority allows Congress and the White House to hash out other pressing fiscal policy issues including whether they can find alternatives to the across-the-board sequestration cuts or reach agreement on a continuing resolution to keep the federal government funded beyond March 27.
Meanwhile, the House Ways and Means Committee heard testimony from four witnesses over several hours including Lee Casey, a partner with BakerHostetler; William Hoagland, senior vice president with the Bipartisan Policy Center; J.D. Foster, senior fellow in the economics of fiscal policy at the Heritage Foundation; and Simon Johnson, professor at the Massachusetts Institute of Technology Sloan School of Management.
Johnson emphatically told lawmakers that the debt ceiling should be taken off the table and that the mere discussion of not paying bills on time has catastrophic consequences.
“A failure to increase the U.S. debt ceiling would seriously and permanently undermine our standing in credit markets, increase interest rates, and worsen the budget deficit. The stock market would also likely fall sharply (and this could well happen, even if interest rates do not spike up),” Johnson wrote in his testimony.
Johnson also noted that the ramifications of not raising the debt ceiling would trickle down to state and local governments.
“The degree of uncertainty being that is being multiplied by this conversation is extraordinary,” Johnson said. “The impact on municipalities is going to be tough. They will face higher borrowing costs.”