WASHINGTON — With an August deadline looming, the House overwhelmingly refused Tuesday to raise the legal limit on government borrowing, setting the stage for a long, sweaty summer of haggling over the shape of the largest debt-reduction package in at least two decades.
Not a single GOP lawmaker voted to support the measure to raise the limit on the national debt from $14.3 trillion to $16.7 trillion — a sum sufficient to cover the government’s bills through the end of next year. Republican leaders said their troops would reject any increase without a plan to sharply curtail spending and, thus, future borrowing.
“The American people are fed up with an endless diet of debt-backed spending,” said Rep. Todd Akin, R-Mo., a member of the House Budget Committee. Without “a solid, long-term balanced budget plan, it is simply foolish to continue to increase the nation’s debt limit.”
Democrats, too, are leery of supporting a higher debt limit, which polls show is extremely unpopular with a large majority of voters. On Tuesday, they abandoned the debt-limit measure in droves, ignoring a long-standing request from the Obama administration to raise the limit before plunging into a complex and politically difficult battle over the size of the federal budget.
Maine Rep. Mike Michaud was among the Democrats who voted against the bill, although after the vote he issued a statement criticizing the House Republican leadership for attempting “to score political points in advance of their meeting with President Obama tomorrow.”
“The only way we will get our debt under control is if we roll up our sleeves, put the partisan showmanship aside, and consider proposals that both rein in spending and let the Bush tax cuts for the wealthy expire. I urge the White House and House leadership to initiate honest, constructive dialogue about serious solutions that will help us get our fiscal house in order,” Michaud said in the statement.
Maine’s other U.S. representative, Democrat Chellie Pingree, voted in favor of the bill.
“I don’t intend to advise our members to subject themselves to a 30-second political ad and attack,” House Minority Leader Steny Hoyer, D-Md., said hours before the vote, noting that GOP leaders had offered the bill with the intention of letting their members vote against it.
Hoyer and other Democrats accused House Speaker John Boehner, R-Ohio, of toying with the issue, running the risk that the “no” vote could roil financial markets. Bond traders, however, appeared to be paying little attention to a move many observers on Wall Street and in Washington dismissed as political theater.
“I didn’t even know they had a vote tonight, to be honest with you,” said Ian Lyngen, a senior government bond strategist at CRT Capital Group in Stamford, Conn. “The only real event that the market is focused on is the point at which they run out of money and have to shut down the government” — a date Treasury Secretary Timothy Geithner has fixed at Aug. 2.
On that date, without additional borrowing authority, Geithner has said the Treasury would be forced to default on at least some of the government’s obligations, an outcome that could have far-reaching consequences for global financial markets and the U.S. economy.
White House press secretary Jay Carney said on Tuesday that default would be “calamitous.” But he dismissed Tuesday’s vote, saying Obama believes Congress ultimately will act both to raise the debt ceiling and to rein in future borrowing.
“We have said and continue to say that we believe both are important priorities and both can proceed concurrently at the same time,” Carney told reporters.
The vote comes one day before all 241 House Republicans are due to meet Obama at the White House, the first such meeting since the GOP seized control of the House in midterm elections last fall. Carney said Obama plans to listen to their concerns but also to underscore their duty to the nation by citing a letter then-President Ronald Reagan sent to Capitol Hill demanding a debt limit increase in 1983.
“The risks, the costs, the disruptions and the incalculable damage lead me to but one conclusion: The Senate must pass this legislation before the Congress adjourns,” the letter says. Carney added: “We agree with Ronald Reagan and many others that we cannot default.”
Meanwhile, debt-reduction talks between the White House and congressional leaders are already under way, led by Vice President Joe Biden. Last week, Biden said the group is on track to produce an agreement that would trim at least $1 trillion from projected budget deficits over the next 10 to 12 years. That would be the biggest debt-reduction package since at least the start of the Clint on administration, when a Democratic Congress approved spending cuts and tax increases estimated to reduce deficits by $433 billion over five years.
This time around, negotiators have agreed to look at pulling about $200 billion in savings from various programs, including federal worker pensions and farm subsidies. They are also eyeing the nearly $800 billion Obama has offered to cut from domestic agencies over the next 12 years.
Beyond that, their work gets much tougher. Biden said the White House would insist on new tax revenues, despite the adamant opposition of Republicans. And Republicans are demanding “significant” cuts to Medicare, the biggest driver of future borrowing, despite stiff resistance from Democrats.
Democratic leaders not only want to protect health benefits for seniors, but also are eager to capitalize politically on an unpopular GOP proposal to replace Medicare with private insurance, partially subsidized by the federal government.
The GOP Medicare plan was a key factor in the Democratic victory last week in a special election in a conservative House district outside Buffalo, and Democrats are worried that a White House deal to cut Medicare spending could spoil a ripe opportunity for them to gain ground on Republicans.
Washington Post staff writer Felicia Sonmez contributed to this report.