Obama, Reid say debt-limit shift wise

GOP aim: Force action on budget

Senate Majority Leader Harry Reid, D-Nev., speaks with reporters following a Democratic strategy session at the Capitol in Washington, Tuesday, Jan. 22, 2013. (AP Photo/J. Scott Applewhite)
Senate Majority Leader Harry Reid, D-Nev., speaks with reporters following a Democratic strategy session at the Capitol in Washington, Tuesday, Jan. 22, 2013. (AP Photo/J. Scott Applewhite)

— The Obama administration said it welcomes a move by House Republicans to vote today on lifting the nation’s debt ceiling through mid-May as a de-escalation of the fiscal debate.

The measure “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,” President Barack Obama’s budget office said in a statement.

White House spokesman Jay Carney said the administration still prefers a long-term extension of the nation’s debt ceiling. Still, Obama “would not stand in the way” if Congress passes the proposal, he said at a briefing.

The Treasury reached its statutory borrowing limit Dec. 31 and is using “extraordinary” measures to avoid breaching the ceiling. Those measures will work only until mid-February to early March, Treasury Secretary Timothy Geithner said in a Jan. 14 letter to congressional leaders.

While the White House said it wouldn’t block the House bill, according to the statement the measure “introduces unnecessary complications, needlessly perpetuating uncertainty in the nation’s fiscal system.”

Under the House Republican plan, the government’s $16.4 trillion borrowing limit would be suspended until May 19. At that point, the measure would allow the nation’s borrowing authority to automatically be increased to accommodate the amount the U.S. Treasury borrowed during those three months.

The House suspension plan is accompanied by a prod to lawmakers on the budget. It says the House and Senate each must adopt a budget resolution for the next fiscal year by April 15 or the pay for members of the chamber that doesn’t act will be withheld and placed in an escrow account.

Senate Majority Leader Harry Reid said he was “very glad” that the House was planning to send over “a clean debt-ceiling bill.”

“The other stuff on it, we’ll approach that when we need to,” Reid, a Nevada Democrat, told reporters.

Reid called the bill “a big step in the right direction” since the three-month GOP debt measure isn’t conditioned on a dollar cut in spending for every dollar of new borrowing authority as House Speaker John Boehner has long demanded.

“The Boehner rule of 1-for-1, it’s gone,” said Sen. Charles Schumer, D-N.Y. “So it’s a good step forward and we’ll see what happens.”

The Senate’s top Republican, Mitch McConnell of Kentucky, said the House vote today will make clear that “they’re hoping to act” to keep the U.S. from defaulting in its debt.

“And then it will be incumbent upon the Senate Democratic majority to function,” McConnell told reporters. “What is their idea about raising the debt ceiling?”

The debt limit has been raised periodically since its creation in 1917 during the presidency of Woodrow Wilson. Since 1960, Congress has raised or revised the limit 79 times, including 49 times under Republican presidents. The U.S. never has defaulted on its obligations.

The idea driving the move by GOP leaders is to re-sequence a series of coming budget battles, taking the threat of a potentially devastating government default off the table and instead setting up a clash in March over automatic across-the-board spending cuts set to strike the Pentagon and many domestic programs. Those cuts - postponed by the recent “fiscal cliff” deal - are the result of a 2011 deficit supercommittee’s failure to reach an agreement.

These across-the-board cuts would pare $85 billion from this year’s budget after being delayed from Jan. 1 until March 1 and reduced by $24 billion by the recently enacted tax bill. Defense hawks are particularly upset, saying the Pentagon cuts would devastate military readiness and cause havoc in defense contracting. The cuts, called a sequester, were never intended to take effect but were instead aimed at driving the two sides to a large budget bargain in order to avoid them.

But Republicans and Obama now appear on a collision course over how to replace the across-the-board cuts. Obama and his Democratic allies insist that more revenue be part of the solution; Republicans say that further tax increases are off the table after the 10-year, $600 billion-plus increase in taxes on wealthier earners forced upon Republicans by Obamaearlier this month.

“We feel by moving the issue of raising the debt ceiling behind the sequestration ... that we reorder things in a way that Democrats will have to work with,” said Rep. John Fleming, R-La. “The cuts are the kind of cuts we want, they’re just not in the places we want, but they’re also not in the places that the Democrats want. So hopefully they’ll be forced to come to the table and work with us on a bipartisan basis to put them where they need to be, where it has the less pain.”

According to the latest calculations, which account for the recent reduction of this year’s sequester from $109 billion to $85 billion, the Pentagon now faces a 7.3 percent across-the-board cut, while domestic agency budgets would absorb a 5.1 percent cut. The calculations are not official but were released Tuesday by Richard Kogan, a budget expert with the Center on Budget and Policy Priorities think tank.

GOP leaders have also promised conservatives that the House will debate a budget blueprint that projects a balanced federal budget within a decade. For the past two years, the fiscal plans of Budget Committee Chairman Paul Ryan, R-Wis., have contained strict budget cuts but havenever projected balance.

Information for this article was contributed by Lisa Lerer, Kathleen Hunter and Roxana Tiron of Bloomberg News and by Andrew Taylor of The Associated Press.

Front Section, Pages 1 on 01/23/2013

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