Are Democrats Inviting A New Debt Ceiling Debacle?

December 31, 2012 7:50 p.m.

To sell Senate Democrats on a controversial plan the White House negotiated with Senate Republicans to avoid the fiscal cliff, Vice President Joe Biden had to repeatedly reassure frustrated members of his own party Monday night that President Obama and Democratic leaders will not negotiate with the GOP to raise the debt ceiling in February or March.

“We also talked about something I feel strongly about is that we should tell the Republicans on debt ceiling we are not negotiating any political agenda in return for raising the debt ceiling,” Sen. Chuck Schumer (D-NY) told reporters in the Capitol after a long Democratic caucus meeting during which Biden pitched his deal. “That if they start doing that, we’re saying, ‘We’re not discussing it. … If you want to let the debt ceiling lapse, and we don’t pay our bills, that’s on your shoulders. We’re not negotiating cuts, revenues or anything else for the debt ceiling. That should just be done automatically. Don’t come and tie the two together because we’re not going to talk to you about that.'”His remarks are the firmest indication from a Democratic congressional leader that elected Democrats will back Obama up on his vow not to be dragged into another debt limit brinksmanship. But they also reflect an unease among Democrats that Republicans will treat Democratic concessions in the fiscal cliff fight as an indication that the Obama administration lacks the resolve to stare the GOP down in a debt limit fight.

Schumer also told reporters, “There was near unanimity that [the budget deal] is better than going over the cliff so you’re going to get a very strong vote here, and that will put pressure on the House.”

But that very willingness to make concessions to avoid the consequences of inaction worries Democrats, some of whom believe the White House lacks the resolve to dismiss the GOP’s debt limit demands. A senior Democratic aide said some members have “diminished confidence” in the administration’s willingness to stare down the Republicans in two month’s time.

A Senate vote on the deal is expected early Tuesday morning. The vote is being delayed while the Congressional Budget Office analyzes the actual budget impact of the proposed legislation, which was still being drafted at press time. The House will consider the bill after Senate passage and could vote on it as early as Tuesday afternoon. Its prospects for House passage are less certain.

For wary Senate Democrats, who do not like particulars of the deal brokered between Biden and Senate Minority Leader Mitch McConnell (R-KY), Biden had to offer assurance that the deal didn’t simply kick the can down the road and set up a new standoff in March that would include some of the same unresolved issues plus the debt ceiling.

“I feel very confident, it was reiterated multiple times tonight, that the President is not going to negotiate about the full faith and credit of the country,” said Sen. Debbie Stabenow (D-MI). “If they choose to create a situation where our country cannot pay its bills, that’s their decision.”

“What they did in summer of 2011 was the most irresponsible thing that’s happened in my years in politics, where they were willing to freeze investment in the country for weeks and weeks and weeks, inject such uncertainty in the economy and hurt job creation,” said Sen. Sherrod Brown (D-OH). “I know they talk about doing it again, but we’re simply not going to negotiate with those kinds of tactics, because it’s clearly damaging.”

Dems are eager to define their terms tonight, because a key provision of the fiscal cliff deal only buys down the sequester for two months, meaning deep cuts to domestic and defense spending will take effect at the end of February, right when the debt limit will have to be increased.

The buy down will be financed with a mix of agreed upon, though still undisclosed, targeted cuts to domestic and defense programs, and with revenues drawn into the Treasury by a measure that will incentivize people with individual retirement accounts not to defer taxation on their retirement savings.

Many Democrats were also unhappy with a measure that will index the $5 million estate tax threshold to inflation, which over time will eat up revenue gains secured by increasing the tax from 35 to 40 percent.

The measure includes a Medicare physician “doc fix,” offset by undisclosed spending cuts and an extension of emergency unemployment benefits that will not be offset.

Those were most contested pieces of the agreement. Negotiators had reached consensus on the major revenue provisions in the deal earlier Monday.

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