January 18, 2013

House G.O.P. Agrees to Lift Debt Ceiling for 3 Months

By JONATHAN WEISMAN

WASHINGTON — Backing down from their hard-line stance, House Republicans said Friday that they would agree to lift the federal government’s statutory borrowing limit for three months, with a requirement that both chambers of Congress pass a budget in that time to clear the way for negotiations on long-term deficit reduction.

The agreement, reached in closed-door negotiations at a party retreat in Williamsburg, Va., was a tactical retreat for House Republicans, who were increasingly isolated in their refusal to lift the debt ceiling. Speaker John A. Boehner of Ohio had previously said he would raise it only if paired with immediate spending cuts of equivalent value.

The decision by Republicans seemed to significantly reduce the threat of a federal government default in coming weeks and was welcomed by Senate Democrats. The House will consider the plan next week.

“It is reassuring to see Republicans beginning to back off their threat to hold our economy hostage,” said Adam Jentleson, a spokesman for Senator Harry Reid of Nevada, the majority leader. “If the House can pass a clean debt ceiling increase to avoid default and allow the United States to meet its existing obligations, we will be happy to consider it. As President Obama has said, this issue is too important to middle-class families’ economic security to use as a ploy for collecting a ransom. We have an obligation to pay the bills we have already incurred — bills for which many House Republicans voted.”

The Republicans’ new tack is designed to start a more orderly negotiation with Mr. Obama and Senate Democrats on bipartisan ways to shrink the government’s trillion-dollar deficit. To add muscle to their efforts to bring Senate Democrats to the table, House Republicans will include a provision in the debt ceiling legislation that says lawmakers will not be paid if they do not pass a budget blueprint.

“The Democratic-controlled Senate has failed to pass a budget for four years. That is a shameful run that needs to end, this year,” Mr. Boehner said in a statement from Williamsburg. “We are going to pursue strategies that will obligate the Senate to finally join the House in confronting the government’s spending problem.”

The decision represents a victory — at least for now — for Mr. Obama, who has said for months that he will not negotiate budget cuts under the threat of a debt default. By punting that threat into the spring, budget negotiations instead will center on two other points of leverage: March 1, when $1 trillion in across-the-board military and domestic cuts are set to begin, and March 27, when a stopgap law financing the government will expire.

Mr. Obama will unveil his own 10-year budget plan in February, laying out his tax and spending plans for his second term. But Senate Democrats, for the past four years, have refused to move a budget blueprint to the Senate floor, in violation of the 1974 budget act that laid out new rules for controlling federal deficits.

House Republicans, for the past two years, have approved sweeping budget plans that would fundamentally remake Medicare and Medicaid, sharply reduce domestic spending, increase defense spending and order a wholesale rewriting of the federal tax code. But without Senate negotiating partners, those plans, written by Representative Paul D. Ryan of Wisconsin, the Republicans’ last vice-presidential nominee, have been more political statement than legislative program.

House Republican leadership aides said Friday that by trying to force Senate Democrats’ hands, Mr. Boehner hoped to move budget talks from ad hoc negotiations between Congressional leaders and the White House to a more orderly process.

“This is the first step to get on the right track, reduce our deficit and get focused on creating better living conditions for our families and children. It’s time to come together and get to work,” said Representative Eric Cantor of Virginia, the House majority leader.

But the proposal marks a significant retreat as well. In recent weeks, conservatives from the editorial board of The Wall Street Journal to the Tea Party-aligned Americans for Prosperity had called on House Republicans to drop their conditions for raising the debt ceiling. Business groups had joined in, and Republican Party elders were growing nervous about how House leaders were approaching the debt ceiling, as well as the deadlines for automatic spending cuts and refinancing the government.

“House leadership by and large understands this series of fiscal inflection points we face present a dire threat the Republican brand, which is already in big trouble,” said Vin Weber, a former Republican House member from Minnesota who remains close to the leadership. “If they’re seen as responsible for actions that further undermine the United States’ credibility in the world, and pushes us closer to falling into recession, Republicans could take a bath in the midterm election, which would be devastating.”

Senator Charles E. Schumer of New York, the third-ranking Democrat, said Republicans could not hold their ground.

“What I think it shows is they realize the debt limit is an untenable position,” he said.