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It’s a central question in the debt ceiling debate: How long should the nation’s new borrowing authority last?
From the start, President Barack Obama has insisted that Congress must raise the current $14.3 trillion debt limit by $2.4 trillion. That would work out to about a 17-month extension, setting up the next vote safely after next year’s elections.
But what’s the magic in that? The nation has increased the debt ceiling time and again by shorter periods, often during presidential election years.
Republicans, meanwhile, in a plan put forth by House Speaker John Boehner, want a six-month debt ceiling increase that would be followed by a longer one — into 2013 — only if Congress enacts sweeping reforms to the tax system and to massive benefit programs like Medicare and Medicaid.
Turns out Republicans opposed multiple short-term debt ceiling votes before they proposed them. The No. 2 House Republican, Eric Cantor of Virginia, last month voiced a preference for a single debt ceiling vote and in an argument remarkably similar to Obama’s said: “I am not so sure that if we can’t make the tough decisions now, why we would be making those tough decisions later.”
The dispute over timing is a crucial obstacle to any deal that would avert a potential government default after Aug. 2. Without action in Congress, the Obama administration says the government won’t have enough money to pay its obligations, and ratings agencies such as Standard & Poor’s and Moody’s have threatened to downgrade the government’s AAA credit rating. That could precipitate higher interest rates that would ripple across the economy.
Boehner’s plan was not winning converts among some stalwart conservatives. It prompted Senate Democratic leader Harry Reid to declare that the bill was destined to fail in the Senate and it drew a White House veto threat. But it was framing the debate over how to reduce long-term deficits while raising the debt ceiling.
In a national, prime-time address Monday, the president declared that Boehner’s plan “would force us to once again face the threat of default just six months from now. In other words, it doesn’t solve the problem.”
But debt ceiling increases are by definition temporary. Since 1993, when the debt ceiling stood at $4.37 trillion, Congress raised the limits 13 times, in amounts that lasted from three months to almost five years. The debt ceiling was raised 18 times during President Ronald Reagan‘s two terms, including three times during his 1984 re-election run, for an average length of about five months. House Republicans point out that is a shorter period than the six-month debt ceiling increase their plan would provide.
The problem for Obama is that Boehner’s plan ties a second debt ceiling increase to a broad scrubbing of entitlement programs such as Medicare, Medicaid and Social Security, with a goal of reducing long-term deficits by at least $1.8 trillion.
Using the debt ceiling as leverage for deficit reduction is a central element of the GOP‘s strategy.
White House officials fear that under such a plan, the debt ceiling would once again be pushed to a near-crisis point in January as lawmakers undertake what so far has been a Sisyphean task to cut the costs of the nation’s biggest benefit programs.
White House officials say that effort would be further complicated because it would be colored by election-year politics.
Boehner and Senate Minority Leader Mitch McConnell both have accused Obama of being more worried about his own re-election than the fiscal health of the country. “With all due respect to the president, we have more important things to worry about than getting through the next election,” McConnell said.
Obama, however, has said he would be willing to seek increases in the debt ceiling during an election year if they somehow would be guaranteed to pass, as they were in a proposal by McConnell.
“That way folks in Congress can vote against it, but at least it gets done,” Obama said Friday. “I’m willing to take the responsibility. That’s my job. So if they want to give me the responsibility to do it, I’m happy to do it.”
For House Republicans, the two-step process was not always the preferred method either.
On June 13, Cantor asserted, “It’s my desire to have one debt ceiling vote.”
A week later, on June 21, he said: “I don’t see how multiple votes on a debt ceiling increase can help get us to where we want to go. We want big reforms, we want big spending cuts and big changes to how this town works. And to me, it is a case of having to make some tough decisions. I am not so sure that if we can’t make the tough decisions now, why we would be making those tough decisions later.”
With six days left before the government exhausts its borrowing authority, Republican officials say they no longer have the luxury of planning a single debt ceiling increase to accomplish the deficit reductions they have in mind.
Those chances faded Friday when Boehner ended negotiations with the White House for a large package of $4 trillion in deficit reductions over 10 years in exchange for a $2.4 trillion increase in the debt ceiling. Boehner said he walked out of the talks because Obama had insisted on $400 billion more in tax revenue than the $800 billion that Boehner was willing to concede.
But Republicans believe the only way Democrats and the president will seriously consider structural changes to Medicare, Medicaid and Social Security is if the debt ceiling is on the line. Boehner’s plan as outlined Tuesday would increase the debt ceiling by $900 billion and seek cuts in day-to-day spending that are greater than that. It then would require a joint committee of Congress to identify deficit reduction measures totaling at least $1.8 trillion. Congress would have to approve those cuts before granting a second debt ceiling increase of $1.6 trillion.
“At this late hour, any plan that’s going to have significant deficit reduction is going to have to be a two-step plan,” Boehner spokesman Brendan Buck said. “There’s just not time to write all the reforms needed.”