Bloomberg News

Senate Republicans Resist Obama on Debt Cap Without Own Plan (1)

September 18, 2013

Senate Majority Leader Harry Reid

Senate Majority Leader Harry Reid said, “I’ve said publicly what I say to them privately: We are not negotiating on the debt ceiling.” Photographer: Andrew Harrer/Bloomberg

U.S. Senate Republicans want to extract something from President Barack Obama in exchange for raising the federal debt ceiling. They just don’t know what.

With at least five of their votes needed to pass legislation in the Democratic-led Senate, Republicans are poised to make demands shaping an agreement to raise the $16.7 trillion federal debt ceiling. Interviews with about a dozen Republicans yesterday yielded few details as lawmakers consider how to boost the nation’s borrowing limit by mid-October, when the Treasury says the ceiling could be reached.

“There’s not a unified Republican ask or a unified Republican position,” Chris Krueger, Washington analyst at Guggenheim Securities LLC, said in a telephone interview. “It’s very hard to see a scenario where you get a clean debt-ceiling raise, but what that final sort of Frankenstein monster looks like remains to be seen.”

Senate Democrats have coalesced around Obama’s call for a measure that omits the spending cuts that were included in a compromise enacted two years ago. On the opposite end of the political spectrum, a faction of Tea Party-backed Republicans is holding out for pairing a debt-ceiling increase with a delay in parts of the president’s 2010 health-care law.

In the middle are Senate Republicans who while reluctant to back Obama’s demand for no additional cuts, haven’t formed a strategy for what they want in return for their votes.

‘Not Negotiating’

Senate Majority Leader Harry Reid, a Nevada Democrat, said yesterday he doesn’t intend to make deals to court Republicans.

“I’ve said publicly what I say to them privately: We are not negotiating on the debt ceiling,” he told reporters.

Still, many Republicans said they want to curb the growth in entitlement programs and simplify the tax code, general talking points in recent fiscal fights on Capitol Hill.

“I’d love to see us reduce spending; I’d like to see a lot of things happen,” said Arizona’s John McCain, one of 28 Senate Republicans who backed the 2011 debt-limit increase.

Senator Lindsey Graham, a South Carolina Republican, said the debt ceiling should be attached to a “road map to turn around the fortunes of the country.”

“We should raise the debt ceiling with a plan, slowly but surely, to get out of debt,” Graham said.

Asked whether Senate Republicans had a coherent position to address the debate, Graham said “No,” and laughed.

Senate’s Say

Although the Republican-controlled House probably will initiate votes raising the federal borrowing cap, the Senate is positioned to dictate the final contours of a deal.

“It’s an unreasonable position to say you’re not going to negotiate,” South Dakota Senator John Thune, the chamber’s third-ranking Republican, said today as he left a closed-door bipartisan Finance Committee meeting with Treasury Secretary Jacob J. Lew.

In 2011, a proposal by the Senate’s top Republican, Mitch McConnell of Kentucky, ultimately formed the basis of the deal that was enacted and sent to the House for an up-or-down vote.

House Speaker John Boehner, an Ohio Republican, is contending with a rebel faction that scuttled consideration last week of a spending measure to keep the government running through mid-December amid disagreement over how they should try to derail the health-care law.

One-Year Delay

Members of that contingent have pointed to the debt limit as another opportunity to try to dismantle the law, as have some Tea-Party-backed senators, including Ted Cruz of Texas.

Following a closed-door meeting of the Republican conference today, House Majority Leader Eric Cantor of Virginia said the chamber will have a plan to increase the debt limit within the next week that would delay implementation of the health-care law.

The debt-limit bill will include a one-year delay of the health law, a “path forward” on a revision of the tax code and the approval of TransCanada Corp. (TRP)’s Keystone XL pipeline, Cantor told reporters.

Republicans cite public support for more control over Washington spending. Forty-four percent of Americans said they opposed increasing the debt ceiling, while just 22 percent supported it, according to an NBC News poll last week of 1,000 adults. The poll had a margin of error of 3.1 percentage points.

“To get an increase in the debt ceiling, we’re going to have to get some savings,” said Senator John Hoeven, a North Dakota Republican.

Spending Cuts

Illinois Senator Mark Kirk said his fellow Republicans should point to Detroit to help win spending cuts in exchange for a debt-ceiling increase. The former auto manufacturing giant was the largest U.S. municipal bankruptcy on July 18, piling up more than $18 billion in debt and an operating deficit of almost $400 million.

“The financial implosion of one of our largest cities is happening right before our eyes,” Kirk said in an interview. “We have got to use the debt-limit debate to slow down spending.”

McCain pointed to different polling -- surveys following the 2011 debt-ceiling debate that showed Republicans bearing disproportionate blame for the dispute, which prompted Standard & Poor’s to strip the U.S. of its AAA top-credit rating.

McCain said “it’s a suicide note” to use the debt-ceiling measure to try to hobble the health-care law.

“To think that somehow we are going to prevail in an argument to defund Obamacare is just the height of foolishness,” the Arizona senator said. “The advantage rests with the president.”

Fiscal Discipline

Among Senate Republicans advocating spending reductions on top of the more than $2 trillion in cuts that have taken place since the 2011 debt-ceiling increase, Senator Susan Collins of Maine said she hoped Congress could agree on more fiscal discipline.

While it’s “really premature” to stake out a position, Collins said, she favors “a long-term fiscal plan” to replace the across-the-board cuts known as sequestration.

“I don’t want to see our country default on its debt and its obligation, but on the other hand this often is an opportunity for leverage in getting the Democrats to face up to our unsustainable debt,” she said.

Senator Johnny Isakson, a Georgia Republican, said it would be a “shame” to give up the opportunity to attach fiscal-restraint measures to the must-pass debt bill.

Entitlement Reform

“I would hate to let a clean debt ceiling go by without the opportunity to leverage the need for that vote to get some improvement in discretionary spending, entitlement reform and things like that,” Isakson said.

Senator Roy Blunt, a Missouri Republican, said Obama would “have to give up something to get the debt-limit increase.”

McConnell, who faces a primary election challenge next year, said yesterday that he’d be “stunned” if legislation to raise the debt ceiling “didn’t do something about the debt.” He declined to say what it would take to win his vote.

Senator Jeff Sessions of Alabama, the top Republican on the Budget Committee, noted that the debt ceiling has led to past agreements, including the 2011 budget cuts.

“I don’t know what we can attach to it,” Sessions said. “There are so many things I’d love to see part of a debt ceiling debate.”

Richard Durbin of Illinois, the Senate’s No. 2 Democrat, predicted “very strong” if not unanimous support among Democrats for a clean debt-ceiling increase.

“I don’t know of any defectors today,” Durbin said, adding that he’d had talked with caucus members.

“I hope there are enough Republicans in the Senate who -- after some test votes on Obamacare -- will be prepared to join us for a bipartisan effort to enact the debt ceiling.”

To contact the reporters on this story: Kathleen Hunter in Washington at khunter9@bloomberg.net; Richard Rubin in Washington at rrubin12@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net


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