Debt-limit fight heats up with Pay Your Bills measure
WASHINGTON — As Congress readied for a new battle over raising the debt limit, Sen. Barbara Boxer announced legislation that would prevent lawmakers from being paid if they do not increase the nation’s borrowing authority.
“It is an American value to pay your bills. It’s also an American value to do your job,” Boxer (D-Calif.) told reporters Wednesday. “If we as members of Congress refuse to pay the bills we have incurred, we should not be paid our salaries.”
Boxer announced the legislation along with the lead House sponsor, Rep. Jim McDermott (D-Wash.). It is modeled on legislation enacted in January that denied salaries to members of Congress if their chamber did not pass an annual budget.
It’s unlikely the Republican-controlled House would pass the proposed Pay Your Bills or Lose Your Pay Act given the opposition by many in the GOP to increasing the debt limit.
But the unveiling of the bill helped set the stage for political maneuvering in coming weeks in the contentious debate as Obama administration officials have begun meeting with lawmakers to start working on a deal.
A partisan standoff over raising the limit in mid-2011 — resolved at the last minute — led Standard & Poor’s Financial Services to downgrade the nation’s AAA credit rating for the first time, to AA+.
Democrats and Republicans are eager to avoid blame if another debt limit fight causes the stock market to tumble.
“For the markets, to a certain extent, it’s sort of like ‘Here we go again,’” said Chris Krueger, a senior policy analyst at financial services firm Guggenheim Partners in Washington. “More than any Washington issue, this has the ability to be truly disruptive to world financial markets.”
House Republicans fired the first salvo last month, passing a bill that they said aimed to avoid a government default by requiring the Treasury to give bondholders and Social Security priority in receiving payments if the debt limit isn’t raised.
Boxer and McDermott fired a counterpunch with their legislation, accusing Republicans of not caring if the nation fails to pay some of its bills.
The Congressional Budget Office estimated Tuesday that the $16.7-trillion debt limit would not need to be raised until October or November as the Treasury Department juggles the nation’s finances to prevent a default.
Treasury Secretary Jacob J. Lew told Congress last month that the debt limit would not need to be raised until after Labor Day but urged lawmakers to “act sooner rather than later to protect America’s good credit” and “avoid potentially catastrophic consequences.”
The U.S. technically reached its debt limit May 19, but accounting maneuvers by the Treasury will help allow the federal government to continue to pay its bills for a while. In addition, improved economic growth, increased tax revenue and a nearly $60-billion dividend payment to the government by taxpayer-owned Fannie Mae will help delay the date that the government runs out of money to pay its bills.
McDermott said lawmakers simply should raise the debt limit because it is needed to pay for spending already authorized by Congress.
“We are not a nation of deadbeats and delinquents,” he said.
House Speaker John Boehner (R-Ohio) has insisted that any debt-limit increase be offset by new spending cuts on top of the ongoing automatic reductions that are part of the so-called sequester.
“I believe that if we’re going to increase the debt limit, there ought to be cuts and reforms in place that are greater than the increase in the debt limit,” Boehner said in an interview on ABC’s “Good Morning America” on Tuesday.
“Our goal here is not to default,” he said. “Our goal here is to get ourselves on a sound fiscal path.”
Republicans also have talked about tying a debt limit increase to other policy initiatives, such as an overhaul of the tax code.
Lew held a private meeting with Senate Finance Committee members last week to discuss a debt-limit increase.
Republicans are concerned that Democrats will try to raise the debt limit as part of a deal on the 2014 budget. Some Senate Republicans are holding up the appointment of members to a House-Senate conference committee to hash out a budget bill unless there is an agreement to exclude the debt limit from those negotiations.
Boxer said she would take a debt-limit increase in any form. As an example of the effect that another standoff would have, she pointed to the 2011 credit downgrade that the Bipartisan Policy Center has estimated will cost the U.S. $18.9 billion in increased borrowing costs over the next decade.
“We’re at a critical moment in our economic recovery ... but playing politics with the debt ceiling will hurt it all,” Boxer said. “Our economy cannot take any more self-inflicted wounds.”
