Boehner: No debt-cap rise without cuts

White House, Senate warn they won’t bargain on issue

WASHINGTON - House Speaker John Boehner on Tuesday signaled a clash with the White House and Senate Democrats over raising the U.S. borrowing authority later this year.

“We’re not going to raise the debt ceiling without real cuts in spending,” Boehner, R-Ohio, told reporters in Washington.

President Barack Obama and Senate leaders have said they wouldn’t accept anything short of a clean debt-limit increase.

“We will not negotiate over Congress’ responsibility to pay the bills that Congress ran up,” White House press secretary Jay Carney said Tuesday when asked about Boehner’s remarks.

Any discussion about raising the debt ceiling must start with the premise that “we are the United States; we do not default,” Carney said.“The president believes Republican leaders share that conviction.”

Senate Majority Leader Harry Reid, D-Nev., said Tuesday that Democrats are “not negotiating on the debt ceiling.”

Congress should pass a debt-ceiling increase without any “high jinks” to ensure a stable economy, Sen. Chuck Schumer, D-N.Y., told reporters July 18. “Attaching other issues to the debt ceiling is playing with fire,” he said.

Boehner said Tuesday that Congress needs to find “significant cuts” in federal spending to replace $1.2 trillion in across-the-board spending cuts over nine years.


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In addition to spending cuts, Republicans say they’re determined to make changes to entitlement programs such as Medicare, Medicaid and Social Security.

In 2011, lawmakers fought for months over raising the nation’s debt limit. Obama signed a debt-limit increase into law on Aug. 2, 2011, the day the Treasury Department warned that U.S. borrowing authority would expire. The bitter negotiations led to the Budget Control Act of 2011, which set discretionary spending caps for 10 years and created a process that resulted in the automatic spending cuts known as sequestration. The cuts started in March.

With the possibility of a fight over the debt limit after the five-week congressional recess that starts in August, Democrats said they worry about repeating the events of 2011.

“It sure will sooner or later create a crisis situation,” Sen. Carl Levin, D-Mich., said in an interview at the Capitol. “It’s that kind of total rigidity that makes it very difficult to get things done: throwing down the gauntlet here and just drawing lines in the sand.”

The need to increase the nation’s borrowing authority will collide with negotiations to fund the government for the 2014 fiscal year that begins Oct. 1. Negotiations will be centered on reducing the deficit and finding ways to replace the spending cuts.

The economy is showing signs of generating more government revenue, even if the recovery is sluggish.

Government tax receipts have climbed 14 percent above the year-ago level, according to Alex Brill, a research fellow at the American Enterprise Institute, who was interviewed by Bloomberg BNA. Economists credit economic growth as well as additional revenue from the tax increase Congress passed early this year.

The Congressional Budget Office projected in May that federal tax receipts would climb from $2.45 trillion in 2012 to $2.81 trillion in 2013, and to $3.78 trillion by 2017.

Congress voted at the end of January to suspend the nation’s debt limit until May 19, temporarily removing the risk of a default. When the ceiling was restored May 19, it increased to $16.7 trillion to reflect the government’s borrowing during the past few months.

By shifting money among government accounts, the Treasury Department can continue borrowing for several months, perhaps as late as October or November.

In May, House Republicans voted to exempt federal payments to creditors from the U.S. debt limit. The House measure would ensure that U.S. government bondholders will continue to be paid and that Social Security benefits won’t be interrupted if a standoff over the nation’s debt limit causes a cash crunch. The Obama administration would be left to decide which of the government’s other bills to pay using tax revenue.

The Democratic-controlled Senate didn’t take up the bill.

The Senate Finance Committee will consider revamping the U.S. tax code this year, Chairman Max Baucus said Tuesday, proceeding without a bipartisan agreement on whether the plan should raise more revenue.

Baucus’ comments were his clearest yet about the timing of committee action on a bill, which hasn’t been released, that would lower tax rates and broaden the tax base. Baucus, D-Mont., said he intends for the proposal to be a bipartisan one.

“We have to reform the code,” he told reporters in Washington. “We’ve got to do our work.”

Baucus’ plan for committee action this year matches efforts in the House by Ways and Means Committee Chairman Dave Camp, R-Mich. Baucus and Camp have started a national tour together in support of a tax-code redo.

Baucus and Orrin Hatch of Utah, the top Republican on the Finance Committee, have asked senators to submit ideas for tax changes by Friday. They said they are starting with a clean slate and are seeking justification for restoring any tax breaks.

Meanwhile, a $108 billion measure that would boost funding for infrastructure projects and housing subsidies for the poor moved ahead in the Senate.

The measure cleared a procedural hurdle by a bipartisan 73-26 vote Tuesday, and that sets up days of debate with the goal of passing the measure next week.

But without a broader budget agreement in place, bigger appropriations for Democratic priorities like road projects and bridge repairs are illusory. The huge measure spends about $10 billion more than a House GOP version and is part of a budget framework set up by Senate Democrats that seeks to replace deep cuts to agency operating budgets with tax increases and more modest curbs on spending.

The measure is one of the 12 annual spending bills that need to be passed each year to set Cabinet budgets. However, if the Senate and House cannot break their impasse over the budget, the government will largely remain on autopilot under mandatory, across-the-board spending cuts.

As a result, the Senate measure as written would be subject to those cuts. The path of least resistance is to pass what in Washington-speak is known as a “continuing resolution,” a measure that funds the government at current levels with minimal adjustments.

“The appropriations bills between the two chambers are so far apart that aligning them would be difficult, if not impossible,” said Sen. Richard Shelby of Alabama, top Republican on the Appropriations Committee. “The endgame will probably be a continuing resolution.”

Senate action came as a House panel responsible for funding the Environmental Protection Agency, clean-water projects and the national parks approved a measure with deep cuts that prompted bitter protests from Democrats.

The top Democrat on the panel, Rep. Jim Moran of Virginia, walked out of the session after excoriating the GOP measure as a “disgrace.”

Moran cited sweeping cuts to grants for clean and safe drinking water projects, the Fish and Wildlife Service, and a cut to the EPA of more than one-third. He also cited numerous anti-environment policy “riders.”

Rep. Nita Lowey on New York, top Democrat on the full Appropriations Committee, said the measure contains an “industry wish list of giveaways,” including provision that would allow mining companies to evade potential rules that would require they have enough money to clean up anything they leak into the ground and water.

At the same time, the full House began debate on an almost $600 billion measure funding the Pentagon and military operations in Afghanistan.

Information for this article was contributed by Roxana Tiron, Kathleen Hunter and Richard Rubin of Bloomberg News and by Andrew Tayler of The Associated Press.

Front Section, Pages 1 on 07/24/2013

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