House Republicans Cave on Debt Ceiling Brinkmanship

In a strategic withdrawal, House Republicans announce plans to pass a short-term debt-limit extension

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Yuri Gripas / REUTERS

House Speaker John Boehner, right, and House Majority Leader Eric Cantor speak to the media on the "fiscal cliff" on Capitol Hill in Washington, Dec. 21, 2012.

House Republicans plan to introduce legislation next week that would increase the nation’s borrowing authority for three months, a tactical retreat that postpones a looming showdown over whether the party is prepared to hike the U.S. debt ceiling.

The measure is contingent on both the House and Senate’s ability to adopt a budget within the next 90 days, a feat that the Senate hasn’t managed to pull off in nearly four years. Failure to do so in either chamber of Congress would strip representatives of their pay.

“We must pay our bills and responsibly budget for our future. Next week, we will authorize a three month temporary debt limit increase to give the Senate and House time to pass a budget,” House Majority Leader Eric Cantor said in a statement. “Furthermore, if the Senate or House fails to pass a budget in that time, Members of Congress will not be paid by the American people for failing to do their job. No budget, no pay. While the House that might have plunged the country into default in the coming weeks.”

The decision is a sharp departure from House Republicans’ repeated insistence that any increase in the U.S. debt limit would require commensurate spending cuts. The strategic shift signals a growing realization that another round of brinkmanship over the country’s full faith and credit would be politically poisonous for a party whose approval ratings have plummeted. In an NBC News/Wall Street Journal poll released Thursday, 49% of respondents said they had a negative view of the GOP, compared to 26% who had a positive view — the party’s worst ratio in that poll since 2008. The survey also showed that a plurality of the public is poised to blame the GOP if a new round of debt-limit negotiations go awry.

Confronted with this grim reality during a conference retreat this week at a tony resort in Williamsburg, Va., House Republicans have apparently decided to tackle the coming cascade of fiscal battles in a different order. Current borrowing limits and the New Year’s Day fiscal cliff deal required the two parties to reach an agreement to raise the debt ceiling sometime between mid-February and early March, depending on how long the Treasury Department can use “extraordinary measures” to stretch its resources. Next Congress will need resolve the sequester, a package of across-the-board cuts to domestic and defense programs, before it takes effect March 1. Finally, Democrats and Republicans must pass a resolution to fund the government beyond March 27, when it is scheduled to run out of money.

In the wake of a fiscal cliff deal that raised taxes for the first time in a generation, many House Republicans have said that the party needs to take a strong stand to cut spending, even if it meant shutting down the government — or forcing a default — and weathering the ensuing blowback from voters. A large bloc of conservatives have said they were willing to go to the mat over the debt limit, the first of the three scheduled fights — and also the one that would wreak the most havoc on the economy. But powerful conservative outside groups, corporate executives and Republican strategists have warned that a default would be disastrous, both for the U.S. and the GOP brand. Republicans may yet be willing to dig in their heels over the sequester or force a government shutdown. For the GOP, kicking the debt limit to the back of the line of budget crises has three major advantages: it puts the Senate on the defensive, gives members cover by tying the measure to a long-sought passage of a budget, and lets them make their stand on safer political ground.

Despite Cantor’s confidence that the measure will pass, there is, of course, no guarantee that his colleagues won’t blow up the agreement.

181 comments
LeonWelch
LeonWelch

Nothing will change. Our debt will continue to climb. Sure there will be times when they will cut a small portion but in the end it will only go up. It has always went up no matter which party holds the power. End game. Sooner or later our currency will fail and this debt will cause us to default. If interest rates were to climb to 5-6% the interest on our debt right now would approach one trillion dollars. No way could we survive having to pay that kind of interest. Say all you want, throw out all the numbers you want but this is the way it is. It is not complicated. It is 2+2=4.

Paul,nnto
Paul,nnto

How many of Poppy's comments were deleted? She sure seems to have had a lot of second thoughts. 

fitty_three
fitty_three

@PoppyPotts  

Looks to me like you found out the hod way that Swampland is not like FOX.

You see, we don't go in for that low information pap that you sling, we like facts, and we don't like the bully/victim meme!

Innocentious
Innocentious

I find it funny that people say the GOP is out of touch... Perhaps it is people that are really out of touch with reality. Let me explain. With the expiration of the Payroll tax cuts and the increase in what the 'rich' pay the Federal Government will bring in about $200 Billion more this year than it did last. Now this should bring Deficit spending down to around $800 Billion to $900 Billion. Of course the Aid package will most likely push this up to $900 Bill and a little change.

With the Fed continuing the policy of QE the odds are that the debt should not be a big deal in the short term. However the real long term systemic issue with the amount of debt we have is growing. Bush spent money on two wars not ever imagining that we would have this long a protracted recession ( which has not happened since the Great Depression ) Even now we are at 144 Million of the 148 Million that we had in January 2008 The median wage for these individuals has not increased either in that time period. This means that Revenue has slowed for the Federal Government while Spending jumped in 2009 and while it has not accelerated much over the last several years ( mainly due to Republicans the last two btw ) the long term refinancing of this debt is in real question.

Because of the Feds QE and the flight from the Euro, we are looking at cheap debt right now. We spent $240 Billion last year on the interest to the debt. However the Fed cannot buy debt forever (though some people like Paul Krugman seem to think this is possible) without serious destabilization of fiscal markets (especially when the next recession hits which it will eventually regardless of who is in charge). This means the debt which we are paying a historically low interest rate of 1.5% overall annually will be refinanced up to the more likely scenario of 5% - 6% per year. To give you an idea of what that would be like please take 16.4 Trillion and multiply by 5% to get $820 Billion to $984 Billion in interest payments a year.

Now that is in today's dollars what we would be paying. As we move forward the debt is going to be come REALLY unmanageable and current OPTIMISTIC CBO projections place us at 22.5% Outlays for the Federal Government over the next Decade rather than the Historic 18% - 20% Outlays. They also assume a much larger growth rate in GDP than what I feel is appropriate, ignoring the possibility of a down turn and not taking into consideration that the USA has slowed significantly over the last decade and a half in its GDP rise.

The Republicans in Congress are looking at the situation of being at a 22.5% outlay per fiscal year, noting that the CBO projections for Revenue are optimistic ( the CBO suggests 21% of GDP I agree this is a hopeless fantasy ) meaning as it comes time to refinance the debt in the next ten years there is going to be 'hell' to pay. Lets put it another way. The Debt will grow at its current at roughly the rate of GDP if not faster then when you add in the amount of interest per year... Well things look bad.

Now should they use the Debt-Ceiling to get the White House and the Senate to actually DO something about this? Well considering if the roles were reversed the media coverage would be talking about what I have just mentioned and saying the Democrats are the Responsible ones, yes I actually think it is not a bad method to bring someone to the table. But only if you have the media behind you backing you up. As it is the GOP cannot win the fight. The media expresses anger and resentment and there is little chance of sane fiscal policy in this light. 

Based on the comments I have seen here, I am really sad. The next crisis is coming and all I see are people backing their side rather than the truth of the matter. Republicans agreed to tax increases on the rich. They do not matter, they are not enough to fill the stop gap of revenue shortage. As predicted of course the left is asking for more from the rich as well. Which if the GOP caves to will simply then be told it is still not enough. Using Money as a divisive tool is an old, old political trick. It works every time. Let me put it a different way. If we wanted a flat tax to actually pay for all the government we have EVERY household would have to pay in Federal tax almost 40% of their income. The Federal Government last year spent about $34,000 per household. If you include Federal and State and local Governments that number is closer to $54,000 per household.

Now how to fix it? Well the first thing to do is at least target about 18% - 20% of GDP as a more logical target for spending. Next is that you are going to have to increase taxes on the Lower Class and Middle class significantly. This will also increase taxes on the rich so have no fear it is not 'ALL' on the poor and middle class. These things have to be done at a slow and measured pace, or preferably through a complete rewrite of the tax code... Which is lets face it atrocious. 

Anyway... I am sad due to the rampant ignorance that I have read on this discussion.

Maxlyn
Maxlyn

This is Harry Potter politics. Wave a wand, incant an incantation and make it so. However, it only works that way in J.K. Rowling's universe. The Re-thugs can't gain leverage by simply saying they have leverage. They can't make Harry Reid do what they want by simply insisting they can. And as to the "threat" of cutting off Congress' salary, why would the Senate ever vote for such an action? The GOP continues to live in an alternate, reactionary universe where up is down, evolution is a Communist conspiracy and a progressive President and his progressive policies are a fascistic attack on America's freedoms when it's exactly the other way around. And this is the best thing that could possibly happen. Let the Re-thugs keep shooting themselves in the head. Let them stake their own vampire hearts. Then we might actually have a functional, sane Congress once again.

j45ashton
j45ashton

Agree with most of the comments here.  The GOP has become a party that has nothing to offer at the federal level.  They only have a presence in the House because partly because the gerrymandering they've done at the state & local level has worked for them & partly because locally many Republicans are in touch with community sentiment (that's a fact most Democrats are unwilling to admit but is born out by Nate Silver's recent statistical analysis).  At the federal level Republicans do see a need to change their stands on migration if they're to have any chance of regaining power.  But most people see that any immigration changes are not heartfelt with the GOP.  They'd only be made to try to hold on to power in a time of changing demographics...and power is all this is about for the GOP.  Has little to do with anything else.  But for Democrats...what the representation in the House says is that the Democrats will have to do a better job at the state and local levels....which for most people means politicians staying honest, fighting corruption and making damn sure that tax dollars are effectively well-spent.

BruceS78
BruceS78

The Senate should send a 5 year debt ceiling increase back to the House and lets see the House does next.  Our debt shouldn't be an issue.  If Congress and the President want to resolve these fiscal issues, lets start with something that they should be able to work out.  There are 13 appropriations bills that both the Senate and House should pass a version of, then get into a conference and hammer out a compromise for each bill.  The Republicans and Democrats can then have 13 changes to whine, complain, make brownie points with their constituents, and then make a deal. .  Oh, I forgot, we can't compromise anymore or we might not get reelected. 

rayboyusmc
rayboyusmc

How are they going to change anything when all they are talking about is what Frank "The Wordsmith" Luntz has called changing their lanquage.  Nothing about their core beliefs or their exclusionary policies.  We just have to say nicer things about people we don't reall like.

These folks are living in an alternate reality that is about to come crashing down on their non inclusionary tent where the angry old white men are serve mint juleps by the minorities.

JosephDillard
JosephDillard

Any time an individual, organization, or nation takes a step back from binge drinking or self induced psychosis it's a huge improvement. But they are still drunks - or crazy.

j45ashton
j45ashton

Carlcid is right.  Republicans have no ideas to help the country.  Their ideas only really help wealthy, landed interests.  90% of everything they say is just complaining about Obama.  And they view everything Obama does as strategic moves to gain more power.  So if he wants reasonable gun laws that Republicans will reject, they say he isn't doing this because he wants to really help the country & save lives; he's really just doing it to make Republicans look bad & turn voters against them.  To them everything Obama does is viewed in terms of strategically gaining power.  And the reason they view it that way is because they represent a white minority that is steadily losing power.  But what they don't see is that they aren't losing power because Obama is such a great strategist.  They're basically losing power because more & more people are starting to see that the Republicans don't stand for policies that are going to help many people.  Republicans are turning themselves into a party of special interest groups.  The religious right, anti-abortionists, white supremacy groups, government haters.  But on education, health care, job creation & the economy...there record shows they have nothing to offer.

Carlcid
Carlcid

Never underestimate the Republican party's capacity for mischief. They are bankrupt for ideas, and they have been outmaneuvered by President Obama, so they are desperately attempting to buy time, and postponing their hostage-taking of the economy for another day. In the meantime, they kick the can down the road, hoping they can come up with some kind of gimmick in the spring. With the GOP, it isn't about what's good for America or the economy. It's always about politics and trying to foil the President at every turn.

Kinnison
Kinnison

Boehner and Cantor are toast.  As more and more Conservatives, as opposed to RINOs, are elected to the House, they will lose their leadership positions and then perhaps GOP Representatives will be able to accurately reflect what they were sent to the House to accomplish:  curbs on spending, smaller less intrusive government and paying down the onerous national debt.

fitty_three
fitty_three

@Paul,nnto  

FYI, the light dawns three days later.  I'm slow, so sue me.  This does qualify for a consolation so please designate your charity.  I'll donate on the 25th.

Now I remember!

fitty_three
fitty_three

@Paul,nnto  

It was kind of a surprise to me.  I guess she must have thought the Swamp was a total pushover.

She's marching to a different drummer, I guess.

LeonWelch
LeonWelch

@Innocentious We are already taxed to death. What they need to do is cut spending to the bone. We do not need a live feed from the Panda Bears.

superlogi
superlogi

@Innocentious@Innocentious In short, you would return to the tax and spend regime of Bill Clinton and a Republican controlled Congress?  I agree.  We should have let the Bush cuts lapse and insisted on a third of government spending be cut in the process.  Unfortunately, the progressive element in this country insists that a complete economic transformation is necessary (European style economic stagnation accompanied by a reduction of global competitiveness).  And, of course, the GOP being populated by gutless RINO's, are so addicted to their personal power and positions, they simply didn't have the stones to attempt it.  Get use to it and get use to the Federal Government borrowing 10% of GDP from other countries and ourselves to get economic growth of less than 3% for as far as the eye can see.  Love that fiscal multiplier Nancy Pelosi and Paul Krugman keep talking about.  Unfortunately, it seems to be working in reverse.

PoppyPotts
PoppyPotts

@Maxlyn they will vote for it if they want this country to continue to exist as we know it.  Obama is not progressive.  If you are progressive, you figure out how to make the wheels turn and the product to come out.  He only knows how to clog up the  system with a lot of his personal problems and tear down things.  He never has anything positive to say about the country as a whole.  He only supports half the population and he is trying to incite civil war.  If you think that is okay acting for the guy at the top then you have been brainwashed and there is no hope for you  

PoppyPotts
PoppyPotts

@j45ashton that "gerrymandering" at the local levels is called, The Vote>  Do you have something against holding public elections too?  I think the Republican Party actually has some very good people coming in from the latino community that have a lot of sensible additions to offer the party.  The GOP is not as stupid as you would like them to be.  they realize that the times change and they will change to suit the younger people because that is their constituency.  The old values will remain as it is what people like about the republican party.   The democraat party is so full of strangeness and perversions and lack of moral character that it has become repugnant.  When young voters have families, they want stability, and opportunity for their kids, not war and weirdness and insanity in government

PoppyPotts
PoppyPotts

@rayboyusmc You are talking about the liberals right,  yes they will be hurt greatly when they find out that money is not for nothing and the chicks aint free any more.

roknsteve
roknsteve

@PoppyPotts Pres. Obama doesn't spend anything, the Congress does, Mr. Potty Mouth.

LeonWelch
LeonWelch

@Carlcid Your kidding right? Do you honestly believe that Obama and the Democrats are not playing politics also?

I am not really high on Republicans but I am not high on Democrats either. Some of us out here know that both parties have done a number on us. We do not climb on one side or the other and call names while the country burns. We honestly want to save our country and could care less about politics which both parties play at our cost.

fitty_three
fitty_three

@Carlcid  

I'm hoping that Obama just says "F**k this!" and invokes the 14th.

mantisdragon91
mantisdragon91

@Kinnison Actually the Tea Party is toast. About 8% of America still see them as relevant. My prediction is it will be less that that come next election cycle.

fitty_three
fitty_three

@Kinnison  

Can you tell me why the teabagger count went from 73 to 60 if that is true?

Paul,nnto
Paul,nnto

@53_3 @Paul,nnto Heh-debt is forgiven. But if you must, take Mrs Fitty out for dinner, that'd make for a very nice settlement.

fitty_three
fitty_three

@outsider2011

She just came in slinging like a female paulejb.  She even admitted she was a racist.

Then, for some reason, she started deleting all of her comments.  Weird.It looks like that she focused on those comments where she got made a fool of.

outsider
outsider

@superlogi@Innocentious 

Isn't europe in trouble because it it tried the policies the GOP is advocating?

 Much commentary suggests that the citizens of Spain and Greece are just delaying the inevitable, protesting against sacrifices that must, in fact, be made. But the truth is that the protesters are right. More austerity serves no useful purpose; the truly irrational players here are the allegedly serious politicians and officials demanding ever more pain. 

 http://www.nytimes.com/2012/09/28/opinion/krugman-europes-austerity-madness.html?_r=0

note the citation; not talking out of my ass. 

 

I suspect, however, that the story is more complicated than that. The economic situation in Europe is worse than here, spending cuts are deeper, and tax increases steeper. We are not Europe, at least not yet.

For instance, overall unemployment in the European Union averages 10.1 percent, two full percentage points higher than here. In Spain it is a staggering 23 percent. In Greece, nearly 21 percent.

It is the same story with taxes. Ireland has raised its Value Added Tax rate to 23 percent. Spain has raised its VAT to 18 percent. In the U.S., GOP rhetoric notwithstanding, we have been cutting taxes throughout the Obama years, not raising them.

 http://www.forbes.com/sites/beltway/2012/05/09/washington-may-be-getting-wrong-idea-from-europes-austerity-revolt/

 http://www.bloomberg.com/news/2012-01-17/austerity-wrong-way-to-fight-eu-crisis-stiglitz.html

Sharp spending cuts and tax increases have long played a central role in the International Monetary Fund's prescriptions for governments in financial distress -- most recently for the struggling members of the euro area. Now, officials at the world's primary arbiter of fiscal prudence are recognizing that such austerity can do a lot more damage than previously thought.

The first major indication of the IMF's change of heart came in October. In its World Economic Outlook, the fund published research showing that back in 2010, when Greece and other European countries embarked on severe austerity programs, its forecasters underestimated the negative impact spending cuts and tax increases would have on the broader economy.

In a paper presented today at the annual meeting of the American Economic Association, two IMF officials -- chief economist Olivier Blanchard and economist Daniel Leigh -- elaborated on the findings and their implications. The paper contains the boilerplate statement that it "should not be reported as representing the views of the IMF." Nonetheless, given its authors, it provides a good indication of the zeitgeist at the fund.

 http://www.bloomberg.com/news/2013-01-04/imf-officials-we-were-wrong-about-austerity.html

fitty_three
fitty_three

@PoppyPotts

PoopyPotti:

You've doubled down on delusion.  Mainly, everything Obama has done has been done by other presidents and everything he does is within the Constitution.   He would have been removed from office if he hadn't.  Checks and balances and POTUS is not above the law.

By the way, poopy, this is Swampland.  Believe me, we've seen your type before, and believe me, you are...not...very....good at it.

j45ashton
j45ashton

@PoppyPotts @j45ashton It's okay.  I guess you don't know what gerrymandering is or how it happens.  But I will say that the challenge now is to democrats at the local level.  To start taking back state houses.  Which in many cases may indeed mean taking more balanced approaches toward unions on the public payroll and making sure that public funds are effectively spent.  As to Obama spending, the Republicans are trying to advance the notion that they are the ones who save their nickels & dimes in a piggy bank vs Obama spending gone rampant whereas the spend under Reagan, GHW Bush & GW Bush outpaced spending under Clinton and Carter. Obama's spending & the action of  the fed has been to keep the whole economy from going into the toilet.  All the results of the prior administration.  The majority of the nation understands that.  

fitty_three
fitty_three

@PoppyPotts

Pretty interesting take on gerrymandering.  IOKYR, right?

"...not war and weirdness and insanity in government."

Hmmm. Right shoe, wrong foot...

fitty_three
fitty_three

@PoppyPotts

Content poppy, content!

That was artless. We've seen insults before.  Try something persuasive!

PoppyPotts
PoppyPotts

@roknsteve @PoppyPotts You are not too bright are you,  I notice your comments all over the place and I can tell  you are young, you are a radical protester and you drink warm beer because it does not damage your liver but coca cola does.  that about sums you up.  Basically you are a misguided crackpot and if you don't like my mouth then don't start poop with me, I might make you sit around all day and not change your diaper and you will get a rash on your face.

j45ashton
j45ashton

@LeonWelch @j45ashton You should keep your prayers for yourself.  Apparently, you want religion in politics.  You and Pat Buchanan.  Freedom from religion in gov't and politics is what started this country.  You might want to read about the Pilgrims, also the first amendment of the constitution.

LeonWelch
LeonWelch

@mantisdragon91 @Kinnison I would not be to quick to deal them out. Wait until things really start to go south, which they will sooner or later, and then get back to me on the Tea Party. Sure you can get on here and bash anyone or anything but the end results is going to be the same which is, you will end up boiling your dog on your kitchen stove just so you can eat.

outsider
outsider

@superlogi @outsider2011 @Innocentious  

Well, i think Krugman is right - since doing the opposite of what he said we should do hasn't helped (see Reagan, Bush, etc) - but i'll concede he's pretty ideological. 

But i'm still waiting for you to back up anything you say. 

Gutting gov't is just destroying the work force; if you can't afford medicare, you should die? 

Standing armies should be volunteer, without pay, because the country they are supposed to protect is too selfish to pay taxes to pay them,?

Hey, you use infrastructure, but why should you have to pay for it? 

Public education? Hell, why should anyone be entitled to an education, right SL?

People work all their lives, and standard of living drops - hey, screw them. Sure they helped build the society you take for granted = but no one should help them now that they can't help themselves. 

You're so full of it - willing to throw everyone under the bus because you believe gov't should be gutted. 

I wouldn't be surprised if you're actually Norquist - you seem just as twisted. Take take take (And don't tell me you don't; each time you go for a drive you're taking advantage of what taxes pay for), but heaven forbid someone else benefit too. 

Reminds me of Paul Ryan, who collected from the gov't after his parents death - then got into power, and started advocating cuts to all social programs. 


It's ok, as long as it's someone else who has to pay - and that's the Right wing, conservative, GOP/TP mantra, right? 


superlogi
superlogi

@outsider2011 @superlogi @Innocentious Spain has over 25% unemployment because of their past prodigious spending, not because it lived within its means.  And now, you and Krugman think you can save a drowning man by giving him a glass of water, in Krugman's case, a barrel of it.  With regard to taking it out of your a$$, citing Krugman is just as bad.  Furthermore, what do you think happens when government confiscates private sector resources and not only spends it on government programs, but borrows more because even that isn't enough?  You really don't have a clue do you?  It's not the government that supports the government.  It's all of us who work in the privates sector who do.  And, right now, we have the lowest percentage of that private sector working in it since 1981.

LeonWelch
LeonWelch

@fitty_three @PoppyPotts Then how about this. The ACA was passed. Every Liberal you meet will be quick to tell you that. But he obeys some of the laws and and does not obey other parts of the law. In other words he is breaking the law. As to the Constitution they break it every time we turn around and Obama is really good at it.

PoppyPotts
PoppyPotts

there are lots of new young faces coming into the Republican party,  Kids that Obama said would have jobs when they finished college and are a little disappointed that they have to work at burget king after they graduated.   Those young people

fitty_three
fitty_three

@PoppyPotts 

Your detachment from reality would amaze me, but then again, you've admitted yourself that you're a bigot.

So maybe your judgement is a wee bit clouded by your hatred?