September 26, 2013

Raising Fiscal Stakes, G.O.P. Sets Terms to Lift Debt Limit

By JONATHAN WEISMAN and ASHLEY PARKER

WASHINGTON — House Republican leaders shifted the budget battle on Thursday to a potentially more consequential fight over raising the government’s borrowing limit, rolling out conditions for a debt-ceiling increase pulled from three years of frustration over efforts to roll back regulations and undo President Obama’s first-term achievements.

House Speaker John A. Boehner also made clear that he is not ready just yet to give up a policy fight that could shut down the federal government on Tuesday. Asked whether he would put a stopgap spending bill to a vote free of Republican policy prescriptions, he answered, “I do not see that happening.”

With just days remaining until a cascade of economic events crash onto Washington, the budget showdown between Congressional Republicans, Senate Democrats and President Obama is only growing more tangled. Behind closed doors in the Capitol, House Republican leaders laid out their demands for a debt-ceiling increase to the Republican rank and file.

They include a one-year delay of the president’s health care law, fast-track authority to overhaul the tax code, construction of the Keystone XL oil pipeline, offshore oil and gas production, more permitting of energy exploration on federal lands, a rollback of regulations on coal ash, blocking new Environmental Protection Agency regulations on greenhouse gas production, eliminating a $23 billion fund to ensure the orderly dissolution of failed major banks, eliminating mandatory contributions to the new Consumer Financial Protection Bureau, limits on medical malpractice lawsuits and an increase in means testing for Medicare, among other provisions.

Representative Kevin McCarthy of California, the House majority whip, said all of those measures have passed the House since Republicans took over in 2011, but they have gone nowhere in the Democratic Senate.

Now, Republicans say, they will use the threat of a potentially devastating default on United States government debt to force consideration. The laundry list of Republican priorities is also needed to build support for any debt-limit increase, which many Republicans say they cannot vote for under any circumstances.

“The president says ‘I’m not going to negotiate,' ” Mr. Boehner said. “Well, I’m sorry, but it doesn’t work that way.”

Given the president’s stance and resistance by Senate Democrats to any threat to postpone the health measure, the House proposal would seem to have no chance of success in the Senate.

Economists of all political persuasions have warned that a failure to raise the debt ceiling by the Treasury’s deadline of Oct. 17 could be catastrophic. The world economy’s faith in the inviolable safety of Treasury debt would be shaken for years, interest rates could shoot up and stock prices worldwide would most likely plummet.

But to House Republicans, those fears are precisely the leverage they need to win passage of their priorities.

“People have to recognize there’s never any compromise until the stakes are high," said Representative Dana Rohrabacher, Republican of California. “In our society, that’s the nature of Democratic government.”

Representative Blake Farenthold, Republican of Texas, said, “That’s why we’re paid the big bucks, right, to figure these problems out.”

But Democrats — and some Republicans — worried on Thursday that the shift to the debt-ceiling fight would leave the government heading toward a shutdown on Tuesday with no resolution in sight.

“I’d like to see us keep that focus there,” said Representative Tom Graves, Republican of Georgia who led the fight to link further government funding to gutting the Affordable Care Act. “We’ve got a responsibility to finish this up and let it play out.”

Senator Patty Murray, Democrat of Washington and chairwoman of the Senate Budget Committee, said the shift in focus from a short-term stopgap spending bill that keeps the government open to the debt ceiling is coming because “Republicans realize fighting a small battle over a small bill is a waste of time.”

She called the House debt ceiling “Christmas list” disingenuous.

“This is not the time to throw in your 50 favorite flavors,” she said. “You can’t just throw everything against the wall and see what happens.”