GOP Would Allow Rise in Debt Cap, Kasich Says

A leading House Republican said Sunday that Congress would let the government take on new debt in order to avoid a possible cash crisis next month, an about-face from GOP efforts to use the federal debt limit as a lever over the White House in budget negotiations.

“We’re going to raise the debt ceiling,” predicted House Budget Committee Chairman John R. Kasich (R-Ohio). “In my opinion, we should. . . . My sense is you don’t want to mess around with defaulting here in the United States.”

In addition, Kasich sought to rule out another broad shutdown of federal programs when a temporary spending measure expires Jan. 26. He endorsed a more selective strategy of funding programs Republicans support, while withholding cash from others they do not.

“We will not shut down the government again,” he said on NBC-TV’s “Meet the Press.”

The comments by Kasich, a key House advocate of a balanced budget, are a strong signal that Republicans are weary of the series of budget crises and shutdowns that have alienated many Americans, according to polls. However, a core group of House GOP hard-liners, including dozens of freshmen, could be reluctant to abandon using the debt limit or another shutdown to pressure the Clinton administration in the budget talks.

The White House on Sunday welcomed the more conciliatory approach toward raising the nation’s $4.9-trillion debt limit--with no strings attached--but threatened a tough response to the emerging GOP strategy of piecemeal appropriations bills.

“If they continue to go after what the president believes are important programs for this country . . . the president will continue to veto those [bills],” White House Chief of Staff Leon E. Panetta said on CBS-TV’s “Face the Nation.”

Kasich’s comments on the debt limit come as the issue of the nation’s borrowing cap once again is coming into the spotlight, with a potential crunch looming early next month.

Just last November, when Congress approved a bill to raise the limit--with an attached proviso that the White House also accept GOP budget guidelines--Clinton vetoed the measure. Immediately thereafter, Treasury Secretary Robert E. Rubin employed accounting maneuvers to prevent the nation from defaulting on its debts.

A number of Republicans has objected to those moves, which involve dipping into civil service trust funds, and Rep. Gerald B. H. Solomon (R-N.Y.) has threatened to seek Rubin’s impeachment.

But despite Rubin’s initial moves, Treasury officials have warned that a new squeeze is expected when a $25-billion interest payment comes due. If the debt ceiling is not raised or Rubin is unable to find other ways around the limit, the government would not be able to pay all its bills.

Outside of the debt limit, GOP budget-cutters have relied on the threat of government shutdowns as a way to pressure the administration in the broader budget negotiations. But the last shutdown generated such a public backlash that Republicans have switched to the notion of targeted appropriations, which carry the potential of more-limited closures.

This new approach is being fueled by signs that the White House and Republicans remain far apart in their negotiations.

The president, Kasich said, has “essentially been protecting the status quo and centralized power in Washington. And what we’ve been trying to do is to shift power and influence and money out of this city to cut back Washington spending and Washington taxes. And we’re just . . . nowhere right now.”

Panetta, who maintained that “we’re close” to a budget agreement, nonetheless said that policies, rather than numbers alone, were the cause of ongoing disputes. He also accused Republicans of trying to turn Medicare into a “second-class system” and said the issue of tax relief remained a basic difference between the two sides.

The White House has proposed an $87-billion tax cut, compared to a $177-billion cut recommended by Republicans, which would benefit families with somewhat higher incomes, along with investors who realize capital gains.

“In order to fund that size tax cut, they are asking for additional cuts in Medicare and Medicaid and the welfare area. And that is not acceptable to us,” Panetta said. “And so that’s where there is this fundamental difference. . . . If they will come down on the tax cut, do a modest tax cut, protect Medicare, we have a deal.”

Panetta maintained that the two sides have agreed on a minimum of $660 billion in savings, which he said would be sufficient to balance the budget, leaving some of the more divisive, ideological issues to be settled on Election Day.

But Kasich opposed a broad budget deal unless it incorporates structural changes in mandatory spending programs, such as Medicare, that are likely to help restrict spending for a long time.

Otherwise, “we would then communicate a message to the American people that all is well--and it would not be, unless we have fundamental changes in these programs.”