Boehner says he doesn’t have votes for clean debt limit bill

U.S. Speaker John Boehner said the House can’t pass an increase to the U.S. debt ceiling without packaging it with other provisions – a nonstarter for President Barack Obama.

“We are not going to pass a clean debt limit,” Boehner said in an interview on ABC’s “This Week” program. “The votes are not in the House to pass a clean debt limit.”

Boehner’s comments came as the government remains partially shut down for the sixth day and just 11 days from when Treasury Secretary Jacob J. Lew told lawmakers the U.S. will exhaust measures to avoid breaching the debt ceiling.

The Obama administration has said it won’t negotiate with Republicans over funding the government or raising the debt ceiling, arguing that it is part of the basic functions of Congress and shouldn’t be used as point of leverage.

Obama, in an interview with the Associated Press, said he expects Congress will reach an agreement to raise the nation’s $16.7 trillion debt limit in time to avert a default.

“The nation’s credit is at risk because of the administration’s refusal to sit down and have a conversation,” Boehner said. Asked if he’d consider putting a clean debt ceiling increase on the floor, Boehner said the House would not be “going down that path.”

Remaining cash

The U.S. will run out of borrowing authority on Oct. 17 and will have $30 billion in cash after that. The country would be unable to pay all of its bills, including benefits, salaries and interest, sometime between Oct. 22 and Oct. 31, according to the Congressional Budget Office.

“Congress is playing with fire,” Lew said on CNN’s “State of the Union” today. “If the United States government, for the first time in its history, chooses not to pay its bills on time, we will be in default, there is no option that prevents us from being in default if we don’t have enough cash to pay our bills.”

Unlike past fiscal feuds, this dispute is more about Obama’s Affordable Care Act, his signature health-care law, and less about the amount of spending. The U.S. budget deficit in June was 4.3 percent of gross domestic product, down from 10.1 percent in February 2010 and the narrowest since November 2008, when Obama was elected to his first term, according to data compiled by Bloomberg from the Treasury Department and the Bureau of Economic Analysis.

Market response

So far, the financial-market response to the political gridlock has been muted. The Standard & Poor’s 500 Index climbed 0.7 percent in New York Oct 4. The yield on the benchmark 10- year Treasury increased two basis points last week, trading between 2.66 percent and 2.58 percent.

While the yield is up from the record low of 1.38 percent in July 2012, it’s below the average of about 6.7 percent since the early 1980s, the start of the three-decade long bull market in bonds.

The consequences of a U.S. government default caused by Congress failing to raise the debt limit could be catastrophic and might last decades, the Treasury Department said in an Oct. 3 report.

“Credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket,” the Treasury said. “The negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse.”

Entitlement programs

Boehner said Obama needed to start a conversation about the drivers of the country’s debt – entitlement programs such as Medicare and Social Security – before he could pass an increase to the debt ceiling.

“I don’t want the United States to default on its debt,” he said. “But I’m not going to raise the debt limit without a serious conversation about dealing with problems that are driving the debt up.”

Obama, who negotiated with Boehner over possible changes to entitlement programs during the 2011 fiscal debate, has said he will be willing to negotiate after the government re-opens and the debt ceiling is increased. Obama included changes to cut the costs that come from Social Security and Medicare in his budget, which was released in April.

“We are happy to negotiate, but we want to negotiate without a gun to our head,” Senator Charles Schumer of New York, the third-ranked Democrat in the chamber, said in a separate interview on ABC.

Political posturing

Schumer called Boehner’s position on raising the debt limit “posturing” and said he thought the pressure on Boehner and House Republicans coming from the business community and constituents would make them “have to back off.”

Boehner has been holding regular closed-door meetings with his members, asking them to stick together as they get close to the debt-ceiling fight. The House has passed a series of smaller funding bills for specific parts of the government, including the National Institutes of Health and national parks.

House Republicans have rebuffed calls from Democrats to put a “clean” bill on the floor to fund the government at the level it was at prior to the partial shutdown.

As he puts together the debt-ceiling plan, Boehner has little room to maneuver. Republicans have a 232-200 majority in the House, which means that they can lose support from only 15 of their members on a bill that doesn’t attract any Democrats.

Boehner’s strategy

Last month, Boehner, 63, outlined a debt-limit increase strategy that also included lighter regulations, cuts in entitlement programs and approval of TransCanada Corp.’s Keystone XL pipeline.

The outline included means-testing Medicare, reducing the changes to malpractice law and eliminating social services block grants. Also being considered was a proposal to eliminate a requirement that gives regulators authority to seize and dismantle financial firms if their failure could damage the stability of the U.S. financial system.

Representative Paul Ryan, a Wisconsin Republican and his party’s 2012 vice presidential candidate, has also been pressing for a plan that would solve the government spending impasse and raise the debt-limit at the same time while implementing economic growth policies and extracting deeper entitlement cuts as some in the Republican conference complained the leaders’ initial outline did not go far enough.

Asked today how he thought it would all end, Boehner said he didn’t know.

“If I knew, I would tell you,” he said.