Obama has said he won’t negotiate the terms of a debt-limit legislation the way he did in 2011, and he is demanding more tax revenue to accompany further spending cuts. House Speaker John Boehner, an Ohio Republican, has said that any increase in the debt ceiling would have to be accompanied by commensurate spending cuts.
Louisiana Republican John Fleming said passing one or a series of short-term extensions may be effective in persuading Obama to discuss spending cuts because “he can’t get onto other agendas that he sees as important like immigration and gun violence while we are still wrangling every three months on debt ceilings.”
While the debt limit has been raised periodically since its creation in 1917 -- with Congress increasing or revising it 79 times, including 49 times under Republican presidents, since 1960 -- Republicans are girding for a fight with Obama and Senate Democrats over tying an increase to spending reductions.
The Treasury Department has said that it expects to run out of emergency measures to prevent a breach of the current debt limit between mid-February and early March.
Investors in U.S. Treasury bonds, who most directly bear the risk of a government default, haven’t shown alarm.
The last time Congress fought over raising the ceiling, Obama signed an increase on Aug. 2, 2011, the day the Treasury Department warned that U.S. borrowing authority would expire. Standard & Poor’s cut the nation’s credit rating. Still, yields on 10-year U.S. Treasury notes declined to 2.56 percent on Aug. 5 and have continued to drop. The yield fell four basis points, or 0.04 percentage point, to 1.84 percent at 5 p.m. in New York, according to Bloomberg Bond Trader pricing.
“The worst thing for the economy is for this Congress and this administration to do nothing to get our debt and deficits under control,” Ryan said yesterday. “We think the worst thing for the economy is to move past these events that are occurring with no progress made in the debt and deficit.”