White House open to short-term increase in debt ceiling

Anita Kumar,William Douglas

The White House indicated Monday for the first time that it would be open to a short-term increase to the nation’s borrowing limit, allowing the federal government to avoid a possible default on its obligations that could plunge the nation into another recession.

Senate Democrats expect to bring a longer-term fix to the floor for a vote later this week. It would raise the debt ceiling for months, perhaps until after the November 2014 elections. House Republicans said they could consider a stopgap measure if it were part of a larger deal.

“If the White House is open to a short-term debt limit increase with accompanying spending cuts and reforms, that is a positive sign,” said Michael Steel, a spokesman for House Speaker John Boehner.

Republicans and Democrats are still deadlocked on how to reopen the government, which partially shut down seven days ago. But with the number of federal employees on furlough shrinking to 400,000 or less out of more than 2 million, attention has quickly shifted to the looming debate over the debt ceiling.

If Congress fails to act before Oct. 17, the United States government would be left with about $30 billion. In the coming days or weeks, it could default for the first time in history.

Gene Sperling, the director of the National Economic Council, told reporters Monday that while the administration prefers a yearlong debt ceiling increase, lawmakers are charged with making the decision about how often they want to raise it. “I think longer is better for economic certainty and jobs, but it is ultimately up to them,” he said.

Just two years ago, during a similar fight over the debt ceiling, the Obama administration opposed a short-term debt ceiling increase.

Later, White House Press Secretary Jay Carney tried to downplay the significance of Sperling’s remarks, saying the decision has always been up to Congress. “What our position has always been was not raise it for a certain amount of time,” he said. “It has been, raise the debt ceiling without drama and delay.”

Boehner, R-Ohio, said Sunday that the Republican-led House of Representatives will not pass bills to reopen the federal government or raise the debt limit unless Obama agrees to negotiate on other issues. Obama has refused to negotiate until Congress passes a bill to reopen the government and passes a debt ceiling increase.

“The president had us all down to the White House last week, only to remind me that he was not going to negotiate over keeping the government open or over the looming need to increase the debt limit,” Boehner said. “The president’s refusal to negotiate is hurting our economy and putting our country at risk.”

Obama challenged Boehner to hold a vote on a “clean” short-term spending bill, at an unscheduled appearance Monday at the Federal Emergency Management Agency’s Washington headquarters. Boehner, the president said, has refused because he doesn’t want an end to the shutdown.

“If Republicans and Speaker Boehner are saying there are not enough votes, they should prove it,” Obama said. “Let the bill go to the floor, and let’s see what happens.”

Aides said Senate Democrats were putting the finishing touches on a “clean” debt ceiling bill – devoid of unrelated provisions. The Senate could vote on it later this week.

“I would hope that this body would do the right thing and that it would push the House to do the right thing, and that is put a clean resolution on the House floor, let’s get the debt ceiling behind us,” said Sen. Jon Tester, D-Mont. “Let’s talk about the debt and debt ceiling in a meaningful way.”

Last week, Treasury Secretary Jack Lew released a report saying that a default could lead to a financial crisis that could freeze credit markets, lower the value of the dollar and raise U.S. interest rates. He is scheduled to testify Thursday about the debt limit before the Senate Finance Committee.

Sen. John Cornyn, R-Texas, accused Obama of treating Congress like “a rubber stamp” when it comes to debt ceiling increases.

“The president and the (Senate) majority leader are now refusing to negotiate at all on the debt ceiling and believe it ought to be rubberstamped,” Cornyn said. “The president cannot take the unsustainable position that it’s my way or the highway and I won’t negotiate. Especially since he’s done it before, and especially since that’s the way our constitutional framework allows resolution of problems.”

By Anita Kumar and William Douglas
McClatchy Washington Bureau