Lines Drawn for Next Big Budget Battle, the Debt Ceiling

Washington – House Republicans, fresh from their showdown with Democrats over cuts in the current federal budget, promised Sunday to take an even tougher stand on spending next month when Congress will be asked to increase the amount of money the government is allowed to borrow.

House Majority Leader Eric Cantor of Virginia and Budget Committee Chairman Paul Ryan of Wisconsin, warned that the GOP won't approve raising the debt ceiling unless that increase is accompanied by both spending cuts and budget priorities.

Raising the debt ceiling is critical because without a higher limit, the government won't be able to borrow money to cover its expenses — including money needed to pay off earlier debt that has come due.

How to cut government spending is likely to dominate national politics through the 2012 elections, with the focus now turning to both the battle over the debt ceiling and to how to craft the federal budget for 2012.

President Barack Obama will weigh in on that fight this week, White House senior adviser David Plouffe said on NBC's Meet the Press.

There was “no way” House Republicans would support an increase in the debt ceiling without “guaranteed steps to ensure that the spending doesn't get out of control again,” Cantor said during an appearance on Fox News Sunday.

Ryan, appearing on NBC's Meet the Press, said, “We believe accompanying any debt ceiling (increase), you need real fiscal reforms, real spending cuts and real spending controls going forward.”

Plouffe on NBC said the president would begin to explain “his approach to long-term deficit reduction later this week.” In a separate appearance on Fox News Sunday, Plouffe praised Friday's agreement, which prevented the government from shutting down for lack of a spending plan.

“Our leaders came together,” he said. “This is what Americans are screaming at the top of their lungs for…Compromise is not a dirty word.”

Both parties have claimed victory in the fight over the 2011 budget, With $38 billion in spending cuts through September, Republicans won more than half of the $61 billion they wanted, but Democrats avoided GOP-backed policy changes, including eliminating spending for Planned Parenthood, that they said were ideologically driven.

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Plouffe warned that any effort by Republicans not to raise the $14.25 trillion debt ceiling would have dire economic consequences.

Without a higher limit, the U.S. might even default on payments owed on previous debt, a development that would damage the country's credit worthiness and raise the cost of borrowing for both the government and private business alike. Treasury Secretary Timothy Geitner has said that failure to raise the limit would lead to uncertainty over the ability of the United States to pay its obligations.

“We should not be playing brinksmanship with the full faith and credit of the U.S.,” Plouffe said.

A fight, however, seemed certain, with the debt ceiling becoming a Republican bargaining chip for more spending cuts and other fiscal changes.

Ryan called for “real caps on spending …so we can take the pressure off the debt.”

He also defended a 10-year budget blueprint that he introduced last week, which contains $6 trillion in spending cuts. The House is expected to take it up later this week.

Ryan would turn Medicaid, a health insurance program for the poor, into block grants and leave spending decisions up to the states. He said that governors have asked for more control over the program.

His most controversial proposal, however, would overhaul Medicare, turning it into a voucher system through which seniors could buy private health insurance.

That change would over time result in higher premiums for the elderly, according to the nonpartisan Congressional Budget Office.

Ryan said his plan “personalizes Medicare,” enabling it to operate much like the program's prescription drug benefit, which offers competition among plans and gives subscribers choices.

Critics say the plan would put an unfair burden on low and moderate income taxpayers.

Ryan said that the “goal is to repair the safety net and make it sustainable.”