Who Will Blink First Over Federal Debt Limit?
The Republicans are learning that there are others in Washington that also know how to play politics. If the GOP thought they were going to be the only ones with a hand worth playing concerning the budget and number crunching…..
The Obama administration said today that it would alter its borrowing strategy to buy as much time as possible before hitting the government’s $14.3 trillion debt ceiling. (An accounting maneuver, essentially shifting debt for the Federal Reserve to debt for the Treasury, will yield an extra $195 billion for regular borrowing needs.) But officials said the move would not change the window in which the debt ceiling will be reached. Treasury Secretary Tim Geithner has told Congress it will be between March 31 and May 16.
What the maneuver might do, however, is push the moment when more borrowing is needed into the back end of that window. And that would mess up the Republicans’ current strategy for forcing their budget showdown with Obama: Continue stopgap appropriations — but only for about one month beyond their current March 4 expiration date, and hope that the debt ceiling is met at the same time in order to create a double witching-hour for the government.
The Republicans are gambling that, especially in light of the record $1.5 trillion (9.8 percent of the GDP) deficit forecast for this year, they will be able to win the argument with Obama by persuading the public that it’s past time to force deep domestic spending cuts.
House Budget Chairman Paul Ryan won’t be using his power to set that spending limit until the House returns from its weeklong recess. The break will give GOP leaders more time to determine what level they want him to set. Leaders are still under pressure from their most conservative ranks to go for cuts worth $100 billion. And now those conservatives (in the form of the Republican Study Committee) have a new idea: Pass a bill directing Treasury to prevent any default by paying principal and interest due on debt held by the public before making any other payments.
