Washington – Speaker John A. Boehner said Monday that Republicans would insist on trillions of dollars in federal spending cuts in exchange for their support of an increase in the federal debt limit sought by the Obama administration to prevent a government default later this year.
In his most specific statement to date on what Republicans will demand in the debt ceiling fight, Mr. Boehner told the Economic Club of New York that the level of spending reductions should exceed the amount of the increase in borrowing power.
“Without significant spending cuts and changes to the way we spend the American people’s money, there will be no debt limit increase,” Mr. Boehner told members of New York’s business and finance community. “And cuts should be greater than the accompanying increase in debt authority the president is given.” Mr. Boehner said those cuts should be in the trillions of dollars, not billions.
In the speech, delivered ahead of a second round of debt limit negotiations with the White House and Senate Democrats on Tuesday, Mr. Boehner did not provide a timeframe for when the spending reductions would have to be imposed.
His address came after a leading Senate Democrat, Senator Charles E. Schumer of New York, accused Mr. Boehner of “playing with fire” by holding the debt limit increase hostage to a push for spending cuts and budget restrictions.
“The idea of refusing to raise the debt ceiling should be taken off the table,” Mr. Schumer said in a conference call with reporters before the speech. Mr. Schumer also said he believed that the debt limit increase should be approved by mid-July to reassure nervous credit markets, though the administration has said it can push the deadline into early August.
In his remarks, the speaker expressed strong resistance to the effort by some Senate Democrats and President Obama for an alternative to enacting specific spending cuts as the price for increasing the debt limit: “triggers” that prompt automatic spending reductions and perhaps tax increases if Congress and the White House do not meet targets for lowering the deficit in coming years. That idea has emerged as providing the potential for compromise over the debt increase.
Mr. Boehner said the reductions should be “actual cuts and program reforms, not broad deficit or debt targets that punt the tough questions to the future. And with the exception of tax hikes — which will destroy jobs — everything is on the table.”
Acknowledging that many in the financial world are uneasy about the prospect that the government might not be able to make good on its financial obligations, Mr. Boehner said it would be more damaging to the nation if Congress granted the administration’s request without taking steps to curb deficit spending and bring down the federal debt.
“It would send a signal to investors and entrepreneurs everywhere that America still is not serious about dealing with our spending addiction,” Mr. Boehner said. “It would erode confidence in our economy and reduce the certainty for small businesses. And frankly I think it would kill even more American jobs.”
The administration has not specified the amount of the increase it is seeking in the $14.3 trillion debt limit, but the previous increase in 2010 was just under $2 trillion, and estimates are that a similar amount would be required to avoid a second politically charged vote on the debt limit before the 2012 elections.
Mr. Boehner also said the debt talks should include “honest conversations” about how to rein in the costs of the Medicare program, and he advocated fundamental changes. Other senior Republicans acknowledged last week that any changes to the health insurance program for older Americans are unlikely to incorporate the party’s proposal to begin providing private insurance subsidies for future retirees.
The speaker managed his party’s negotiations with the White House and Senate Democrats this year over current spending and pushed his demands for cuts to the final hours, when a last-minute deal for about $38 billion in cuts avoided a federal government shutdown shortly before midnight on April 8. Asked by an audience member whether he would entertain a short-term increase in the debt limit if no deal was reached, Mr. Boehner was noncommittal.
Mr. Schumer and Roger C. Altman, an investment banker and former Clinton administration Treasury official, said the consequences for the nation’s economy could be dire if the government defaulted for the first time in its history or if the debt-ceiling talks were pushed to the brink.
“If America were to default, even for 24 hours, that would have an unprecedented and a catastrophic impact on global financial markets and on American markets,” Mr. Altman said.
But Mr. Boehner said the debt limit fight provided a unique opportunity. “I don’t want to allow this moment that we have in our history to pass without real action to solve our long-term economic problems,” he said.
Not everyone can pay for the news. But if you can, we need your support.
Truthout is widely read among people with lower incomes and among young people who are mired in debt. Our site is read at public libraries, among people without internet access of their own. People print out our articles and send them to family members in prison — we receive letters from behind bars regularly thanking us for our coverage. Our stories are emailed and shared around communities, sparking grassroots mobilization.
We’re committed to keeping all Truthout articles free and available to the public. But in order to do that, we need those who can afford to contribute to our work to do so.
We’ll never require you to give, but we can ask you from the bottom of our hearts: Will you donate what you can, so we can continue providing journalism in the service of justice and truth?