Speaker seeks negotiation in return for debt proposal
Print Edition
House of Representatives Speaker John Boehner said yesterday he would give President Barack Obama a proposal temporarily extending the government’s ability to borrow money and averting a potential default — but only if he agrees to negotiate over ending a partial government shutdown and a longer-term increase in the debt ceiling.
Though the Republican proposal could avert an unprecedented federal default that the Obama administration has warned could occur as early as October 17, it would not necessarily bring a quick end to the separate partial federal shutdown. Obama has insisted that Congress reopen the government without condition.
A White House official said Obama would be willing to negotiate over the budget “once Republicans in Congress act to remove the threat of default and end this harmful government shutdown.”
Boehner said the measure to allow the US to borrow money would advance if Obama agrees to negotiate over reopening the government and to “start to deal with America’s pressing problems.” Republicans said the extension would last through November 22.
“It’s time for leadership,” Boehner said. “It’s time for these negotiations and this conversation to begin.”
Boehner also said he would appoint House negotiators to try to sort out differences between vastly different House and Senate-passed budget blueprints.
Under Boehner’s offer, the House would also appoint negotiators to bargain with the Democratic-led Senate over a budget compromise. Those talks have been on hold for months, and the two chambers have deep differences over taxes and cuts in benefit programs.
International Monetary Fund chief Christine Lagarde warned at a news conference yesterday that US failure to raise its debt ceiling because of a political impasse would do serious damage to both the American and global economies.
The US government risks its first default next Thursday if Congress doesn’t approve a bill increasing the government’s borrowing authority — required so Treasury can borrow more money to pay the government’s bills in full and on time. Separately, a shutdown of the federal government entered its 10th day, as Congress has failed to pass a bill to temporarily fund it. Both measures are normally routine, but have become entangled in Republican demands for delaying or altering Obama’s health care overhaul and reducing government spending.
Ending shutdown
Obama has said he would sign a short-term debt limit extension, but not if it contained other language that he opposes, and wants Congress to send him a bill unconditionally ending the partial government shutdown as well.
The impasse over increasing the debt limit has already sent the stock market south, spiked the interest rate for one-month Treasury bills and prompted Fidelity Investments, the largest US manager of money market mutual funds, to sell federal debt that comes due around the time the nation could hit its borrowing limit.
Treasury Secretary Jacob Lew warned the Senate Finance Committee that failure to renew the government’s ability to borrow money “could be deeply damaging” to financial markets and threaten Americans’ jobs and savings. It would also leave the government unsure of when it could make payments ranging from food aid to reimbursements to doctors. “The United States should not be put in a position of making such perilous choices for our economy and our citizens,” he said. “There is no way of knowing the irrevocable damage such an approach would have on our economy and financial markets.”
Lew confronted Republicans who said the bigger problem was the soaring costs of benefit programs like Social Security pensions and Medicare health entitlements and the long-term budget deficits the US faces. Many expressed doubt about Lew’s description of the consequences of default.
Lew rejected Republican suggestions that in the event federal borrowing authority expires, the government could use the dwindling cash it has to make payments to debt holders and other high priority needs.
Democratic Finance Committee Chairman Max Baucus said Republican demands to curb Obama’s health care law as the price for ending the shutdown “is not up for debate.”
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