Mon April 15, 2013
The Next Debt Ceiling Deadline
Originally published on Mon April 15, 2013 9:02 pm
MELISSA BLOCK, HOST:
And now, to Capitol Hill where lawmakers are debating several big ideas these days. There's the gun control bill in the Senate and a possible compromise on immigration reform. But that's not all. In just a few months, another fiscal fight could steal the spotlight.
NPR's Tamara Keith has this look forward to a potential battle over the debt ceiling again.
TAMARA KEITH, BYLINE: It's back to the future. Sometime around late July or early August, if Congress doesn't act, America would tap out on its borrowing authority and not be able to pay all of its bills. This may bring back bad memories of the summer of 2011.
(SOUNDBITE OF NEWS MONTAGE)
UNIDENTIFIED WOMAN #1: Both the House and the Senate are in session this weekend.
UNIDENTIFIED WOMAN #2: The debt limit deadlock continues.
UNIDENTIFIED MAN: Senate majority leader Harry Reid is sounding the alarm about...
KEITH: Republicans refused to raise the debt ceiling unless the president agree to an equal amount of spending cuts. It went right down to the wire. And the result was an agreement that brought us terms like supercommittee, fiscal cliff and sequester.
But this time, House Republicans say it will be different. Sometime soon, within weeks, the House plans to pass a bill that would prioritize interest payments on the debt. Pay bond holders first, then Social Security recipients, veteran and so on.
Georgia Republican Tom Price, an author of the bill, says this would take the threat of default off the table.
REPRESENTATIVE TOM PRICE: But there's all this concern that if we breached the debt ceiling, that there is a question as to whether or not the United States would default on its debt. The answer to that is absolutely not. And this simply makes it so that the president can't force a default.
KEITH: He says it would also have rhetorical value if there's another standoff with the president.
PRICE: We want to let the American people know that we will live up to our responsibilities, we will pay our debts.
KEITH: Former Treasury Department officials from both Democratic and Republicans administrations say there are problems with this plan. The payment systems may not be able to adapt quickly enough to prioritize payments. And making interest payments, while failing to pay other government bills, probably wouldn't be all that reassuring to bond holders.
Even Oklahoma Republican Tom Cole, while saying prioritization is prudent and an insurance policy, also says it wouldn't help much.
REPRESENTATIVE TOM COLE: I'm not convinced thatany of these things will make a great deal of difference. I think the international financial communities, like your local banker - if you're paying him but he's sees you're not paying other people, then he's not likely to lend you more money. And he's probably going to try and get back the money he's already lent you.
KEITH: Maryland Democrat Chris Van Hollen says this idea is really all about politics.
REPRESENTATIVE CHRIS VAN HOLLEN: But this is such a thinly veiled effort at political cover, I think it's going to backfire and boomerang on them very quickly because, at its heart, it says we're going to prioritize payment to bond holders above our obligations to Social Security recipients or other obligations the federal government takes on.
KEITH: Prioritization or not, it seems few in Congress are looking forward to another game of chicken over the debt ceiling. House Speaker John Boehner at a press conference last week made it clear taking it down to the wire isn't his goal.
REPRESENTATIVE JOHN BOEHNER: It isn't to default on our debt. The goal here is to cut spending. And I made clear that until we get spending cuts and reforms that will put us on a path to balance the budget over the next 10 years, you know, we're going to have fights.
KEITH: But those fights may just have a different tenor.
REPRESENTATIVE EARL BLUMENAUER: I would like to think that it is much less likely to explode this year than it did in 2011.
KEITH: Earl Blumenauer is a Democrat from Oregon.
BLUMENAUER: I have had a number of conversations with people on both sides of the aisle. That leads me to believe that there are some grown ups, if only because of - if not the economic consequences, the political consequences.
KEITH: After the brinksmanship of 2011, one credit rating agency downgraded the U.S. debt. And Congress, especially Republicans in Congress, took a beating in the polls.
Tamara Keith, NPR News, the Capitol.
(SOUNDBITE OF MUSIC)
ROBERT SIEGEL, HOST:
This is ALL THINGS CONSIDERED from NPR News. Transcript provided by NPR, Copyright NPR.