Debt limit strategies debated
WASHINGTON — Republicans said on Tuesday they hoped to attach deficit-reduction measures to legislation raising the debt limit, but a new government report that forecast a more favorable budget outlook had the potential to undercut their efforts.
The call by House Speaker John Boehner for deficit-reduction steps was an attempt to answer the concerns of the smaller-government Tea Party activists who populate his rank-and-file.
But a series of obstacles could thwart Boehner's plans. Democrats are promising to close ranks behind President Obama, who has insisted on a “clean” debt limit hike that allows the federal government to continue paying its obligations.
And Boehner's own Republicans are divided over which deficit-reduction measure or measures to link to the debt hike legislation.
As House Republicans met behind closed doors to hash out a strategy, financial markets showed some early signs of jitters over the debt ceiling, as investors pushed the interest rate on an $8 billion one-month Treasury bill auction to the highest level since the government shutdown in October.
The Treasury began to employ extraordinary cash management measures to ensure that it can pay its bills when a temporary extension of borrowing authority expires on Saturday.
Treasury Secretary Jack Lew has warned Congress that it must act by the end of February to raise his borrowing authority or risk a historic debt default.
“Nobody wants to default on our debt,” Boehner told reporters following his meeting with rank-and-file Republicans.
Boehner added that while Republicans advance legislation to raise the nation's borrowing authority, “We ought to do something about jobs and the economy, about the drivers of our debt.”
His comments were made as the nonpartisan Congressional Budget Office released forecasts estimating this year's budget deficit would fall to $514 billion. While sizeable, that would be down from the wrenching deficits of $1.413 trillion in fiscal 2009 and $1.3 trillion in both 2010 and 2011, which fueled heated spending-cut debates.
CBO said that the budget deficit would fall further in fiscal 2015, to $478 billion.
Congressional aides from both parties have said that the trajectory of budget deficits could take the edge off Tea Party demands for a new round of spending cuts.