Updated 5/10/2011
In a Monday speech before top Wall Street executives at the Economic Club of New York, House Speaker John Boehner said Congress should not increase the national debt limit at all unless it simultaneously cuts federal spending by a dollar figure that’s larger than the amount of new borrowing authority it gives the government.
“Without significant spending cuts and reforms to reduce our debt, there will be no debt limit increase,” Boehner said. “And the cuts should be greater than the accompanying increase in debt authority the president is given.”
Boehner and other top Republicans have said for weeks that they won’t raise the debt limit without huge concomitant spending cuts. But his speech tonight will lay down a new marker. And it suggests Congress will only give the Obama administration as much new borrowing authority as the Obama administration is willing to accept in spending cuts.
If the White House doesn’t call Boehner’s bluff, that means Democrats will have to play ball with Republicans on entitlement cuts — that is, if they’re going to get anywhere near the $2 trillion debt limit increase they’re seeking.
“That includes honest conversations about how best to preserve Medicare, because we all know, with millions of Baby Boomers beginning to retire, the status quo is unsustainable,” Boehner said, according to prepared remarks.
Alternatively, Democrats could settle for an extremely modest debt limit hike, which would allow Republicans to return for more bites at the apple in the weeks and months ahead.
In the speech, which was ironically rooted in the threat that Republicans will allow the country to default on its debt and send the economy into a tailspin, Boehner foreclosed on the idea of addressing national deficits with tax increases, by arguing that they create too much uncertainty.
“The mere threat of tax hikes causes uncertainty for job creators — uncertainty that results in less risk-taking and fewer jobs,” Boehner said.
Senate Democrats, most vocally Chuck Schumer (D-NY), are calling on Boehner to abandon the goal of tying partisan ideological agenda items to must-pass debt-limit legislation. In a conference call with reporters, Schumer said “this next speech by the Speaker will be a litmus test on whether House Republicans plan to finally approach the debt ceiling as adults.” Boehner has in the past acknowledged that the debt limit will have to be raised, and Democrats are hoping that Boehner’s threats prove non-credible, which would allow them to drive a huge wedge between him and his conservative caucus.
We’ll be watching for any surprises.
