Washington It was a tough-talking House Speaker John Boehner who warned Wall Street this week that Congress won’t raise the government’s debt ceiling without massive spending cuts that most Democrats oppose.
The swagger struck some as odd. The Ohio Republican, after all, has said failure to increase the borrowing limit this summer would trigger a financial disaster for the United States and the world.
But allies say Boehner had multiple motivations for insisting on trillions of dollars in spending cuts, and no tax increases, as the price for rounding up enough votes to allow more borrowing and prevent the country from defaulting on its debt.
For one thing, public opposition has forced Republicans to de-emphasize their proposals to convert Medicare to a less costly voucher program. A more adamant stand on spending cuts could help compensate for that setback, according to members of both parties.
Experts warn that a default would be an unprecedented event that could cause economic chaos, shaking global confidence in the U.S. government and forcing it to pay higher interest rates when it borrows money. Nevertheless, polls show that Americans strongly oppose increasing the debt ceiling. Sixty-three percent of those surveyed in a CBS News poll in April were against raising the limit.
During Congress’ recent two-week recess, angry constituents warned scores of GOP House members not to increase the borrowing limit.
“What they heard was, ‘Don’t raise the debt ceiling!’” said Rep. Jeff Flake, R-Ariz.
Flake, who is running for the Senate, said his fellow Republicans were a bit tentative this spring in demanding deep spending cuts when Congress voted on a package to keep the government running through the fiscal year that ends Sept. 30. Had the government shut down, he said, public resentment “probably would have fallen on us,” just as it fell mainly on House Republicans in the shutdowns of 1995-96.
But Flake argues that the more complex issues surrounding the nation’s ability to borrow money and repay its loans fall more heavily on the president, the government’s chief executive.
“This is more the White House,” he said, and that gives Republicans leverage in negotiations.
And so an emboldened Boehner told the Economic Club of New York on Monday: “Without significant spending cuts and reforms to reduce our debt, there will be no debt limit increase.”
Adding a new demand, Boehner said the cuts “should be greater than the accompanying increase in debt authority the president is given.”
Many took that to mean spending cuts of at least $2 trillion, the amount of new borrowing needed to get the government through the 2012 elections. Boehner’s staff, however, said the speaker deliberately avoided giving a number. And they declined to say whether Boehner envisions a 10-year time frame for the savings, or something else.
The Obama administration suggested Boehner is merely staking out an early negotiating stance that he knows will not hold when it’s time to compromise with the Democratic-controlled Senate and White House.