Treasury Chief Urges Debt Ceiling Be Raised

Despite a hard-fought agreement this weekend between Republicans and President Clinton that immediately returns federal employees to work, Treasury Secretary Robert E. Rubin cautioned Sunday that action is still needed to prevent default on the government’s debts.

On a day when congressional Republicans sharply criticized Clinton’s proposal to balance the federal budget in seven years, Rubin said that lifting the debt ceiling should be resolved irrespective of the ongoing partisan fight over the budget.

Leaders of both parties agree that the debt ceiling needs to be raised, from the current $4.9 trillion to $5.5 trillion. But congressional Republicans have been unwilling to meet Rubin’s request for “clean” legislation that would lift the ceiling without also forcing the president to cede ground in the fierce debate over how or whether to balance the budget.

Clinton’s submission on Saturday night of his own balanced-budget proposal met a demand of congressional Republicans, paving the way for a reopening today of all government operations and services, although the major snowstorm Sunday is expected to delay complete reopening. Federal employees would remain on the job until Jan. 26--when another temporary spending measure or a final budget deal would be needed.

Rubin, whose recent accounting maneuvers to cover debt payments without a formal lifting of the ceiling drew impeachment threats from Republicans last week, predicted that Congress will take appropriate action to prevent a default. The Treasury secretary has enraged some of the Republicans, including House Rules Committee Chairman Gerald B.H. Solomon (R-N.Y.), by borrowing from Civil Service retirement accounts to avert default.

But Rubin indicated that unless Congress acts or unless he can soon identify other lawful means of temporarily making payments, the risk of default would arise around mid-February.

“We will then have a requirement again for additional [debt payments],” Rubin said, appearing on NBC-TV’s “Meet the Press.” Rubin noted that a bipartisan group of six former Treasury secretaries has written to House Speaker Newt Gingrich (R-Ga.), urging that the debt ceiling be resolved apart from the balanced-budget imbroglio.

In response, House Majority Whip Thomas DeLay (R-Texas) said Republicans will not agree to separate the lifting of the debt ceiling from their efforts to force Clinton to accept a seven-year budget plan of their liking.

Referring to the seven-year plan to balance the budget that Clinton proposed, DeLay said Sunday: “This president doesn’t want to balance the budget because he is a liberal Democrat [who] wants to continue more spending.”

Negotiations to reach an agreement by Jan. 26 that would avert a third shutdown of the government were canceled Sunday because of the snowstorm that has paralyzed the Eastern Seaboard. Talks among Clinton, Gingrich and Senate Majority Leader Bob Dole (R-Kan.) were tentatively scheduled to resume today.

DeLay, also appearing on NBC, at first accused Rubin of avoiding a federal default partly by “looting the Social Security trust funds.” DeLay immediately withdrew that allegation when the program’s host pointed out that Rubin has not tapped any Social Security funds.

Although DeLay acknowledged that Rubin “is on firm legal ground,” he sought to impugn the Treasury secretary’s borrowing from the Civil Service retirement accounts. “If corporate America had done what he has been doing, they’d be in jail right now,” DeLay said.

Rubin dismissed the criticism he has faced as election-year rhetoric. “I’m fulfilling . . . my constitutional obligations of doing everything possible that is in total conformity with the law to meet the obligations of the United States government,” Rubin said. In addition to damaging America’s creditworthiness globally, Rubin warned, a default would prevent “timely payments” on entitlements, including Social Security and Medicare.

Without lifting of the debt ceiling by Congress and Clinton, Rubin’s spokesman, Howard Schloss, said that the Treasury secretary is seeking other lawful ways to pay the government’s bills.

“We’re looking at measures, we’re hopeful of finding something,” Schloss said in an interview.

Times staff writer Paul Richter contributed to this story.