Republicans instead plan to use two other approaching deadlines -- the March 1 start of automatic spending cuts and the need to pass a bill to fund the government by the end of March -- to extract spending reductions from President Barack Obama and congressional Democrats.
The revised strategy eliminates the risk that House Republicans would be blamed for a potential default. By focusing on the other deadlines, Republicans said they’re not giving up their fight for cuts to federal programs.
“The problem with the debt ceiling is if we do not agree on that, then federal checks don’t go out, the military doesn’t get their pay,” Representative John Fleming, a Louisiana Republican, said in an interview. “What we’ve chosen to do is push that back behind the other two events.”
The House is expected to pass legislation to temporarily suspend the government’s $16.4 trillion borrowing limit until May 19. At that point, the measure would allow the nation’s borrowing authority to automatically be increased to accommodate the amount the U.S. Treasury borrowed during those three months.
The House debt-ceiling plan is accompanied by a prod to lawmakers on the budget. It says the House and the Senate each must adopt a budget resolution for the next fiscal year by April 15. If not, the pay for members of the chamber that doesn’t act will be withheld and placed in an escrow account until they adopt one -- or, at the latest, until the end of the 113th Congress.
The Obama administration said it welcomes the House vote on lifting the nation’s debt ceiling through mid-May as a de- escalation of the fiscal debate.
The measure “lifts the immediate threat of default and indicates that congressional Republicans have backed off an insistence on holding the nation’s economy hostage to extract drastic cuts in Medicare, education and other programs,” the Office of Management and Budget said in a statement yesterday.
The debt limit has been raised periodically since its creation in 1917, with Congress increasing or revising it 79 times, including 49 times under Republican presidents, since 1960.
Enactment of the legislation could allow the Treasury to continue borrowing for several months and delay the need for a permanent increase in the debt ceiling until late summer. Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey, told Bloomberg BNA in an e-mail that “our very tentative estimates suggest” that the Treasury “might not need another permanent increase until August.” Analysts at New York- based RBC Capital Markets LLC concurred, telling clients in a daily research note that “under this deal the drop-dead date might slide until August.”
The Treasury Department has said that it expects to run out of emergency measures to prevent a breach of the current debt limit between mid-February and early March.
Investors in U.S. Treasury bonds, who most directly bear the risk of a government default, haven’t shown alarm. The 10- year yield was unchanged at 1.84 percent at 7:43 a.m. in New York today, according to Bloomberg Bond Trader prices.
The last time Congress fought over raising the ceiling, Obama signed an increase on Aug. 2, 2011, the day the Treasury Department warned that U.S. borrowing authority would expire.
Once the House passes the bill today, the measure would go to the Senate. Majority Leader Harry Reid, a Nevada Democrat, said yesterday he was “very glad” that the House was planning to send over “a clean debt-ceiling bill.”
“The other stuff on it, we’ll approach that when we need to,” he told reporters in Washington.
The Senate’s top Republican, Mitch McConnell of Kentucky, said the House vote will make clear that “they’re hoping to act” to keep the U.S. from defaulting on its debt.
“And then it will be incumbent upon the Senate Democratic majority to function,” McConnell told reporters. “What is their idea about raising the debt ceiling?”
The vote on the debt ceiling would clear the way for House Republicans to focus on the debate to replace about $1.2 trillion in automatic spending cuts, half of which would come from defense. Congress delayed the start date of the automatic cuts, known as sequestration, to March 1.