The Clinton Administration’s offer to accept a temporary increase in the government’s borrowing authority is getting a chilly reception from Republicans.
The Administration said Friday it would accept a stopgap $85-billion boost in the nation’s debt limit to keep the government operating through mid-January. Treasury Secretary Robert E. Rubin told Republican leaders he would be happy to discuss the idea.
“That would take it into January, right?” Senate Majority Leader Bob Dole (R-Kan.) said to reporters. “That would be too long.”
House Speaker Newt Gingrich (R-Ga.) did not leap at the offer and said he is holding out for discussions with President Clinton.
Rep. Nick Smith (R-Mich.) said he did not trust Rubin’s estimate of when the government will run out of cash and default on its debts.
“We need to know what options are available to avoid default,” Smith said. “If [the Treasury Department] won’t give us the information, we will get it from somewhere else.”
Rubin sent a letter to Gingrich and other Republican leaders asking for their cooperation. Until now, Rubin has insisted the only responsible course for Congress is to increase the borrowing authority to $5.5 trillion.
Rubin said Clinton asked him to contact Gingrich to discuss the possibility of averting a debt default crisis through a short-term increase in the government’s $4.9-trillion debt ceiling.
At the White House, Joseph E. Stiglitz, chairman of the President’s Council of Economic Advisers, said a potential default by the government is the biggest risk facing the economy.
“Foreigners are more likely to be spooked by that kind of event,” he said. “And that could have very adverse effects both on bond markets and stock markets and foreign exchange markets. That is the major short-run cloud we see.”
Rubin has said the government is about to exhaust its ability to borrow money and the first default in the nation’s history could occur next month.
Republicans want to use the issue to pressure Clinton to accept the GOP plan for balancing the budget in seven years.