Debt Problem Rests on Clinton, Gingrich Says

Despite growing GOP reservations about the wisdom of engaging in budgetary brinkmanship with the White House, House Speaker Newt Gingrich (R-Ga.) said Monday that Congress would not agree to raise the federal debt ceiling unless President Clinton personally requests an increase and makes a substantial step toward broader budget-balancing goals.

Clinton administration officials responded by announcing extraordinary financial steps designed to keep the government from bumping against the debt ceiling and going into default in mid-February, when it must make billions of dollars in interest payments.

Treasury Secretary Robert E. Rubin said that the measures would postpone the day of reckoning for about two weeks. He insisted that the maneuvers were the final ones available to him to finesse the debt limit.

In a letter delivered to Gingrich at the end of the day, Rubin said: “I have now concluded that either Feb. 29 or March 1 is the date on which Treasury will no longer be able to fulfill all of its financial obligations without legislation increasing the statutory debt limit.”

Gingrich, taking the same confrontational stance adopted by House Majority Leader Dick Armey (R-Texas) a day earlier, told reporters that Republicans could not “in good conscience” vote to raise the debt ceiling without assurances that Clinton is willing to take steps to limit the growth of the national debt in the future.

“It’s a two-way street here,” the speaker said. “What substantial reform is he prepared to sign as far as getting a debt ceiling?”

Asked what kinds of budget concessions would be required from Clinton, Gingrich said that it would be a “step in the right direction” if the president agreed to “substantial” reforms of entitlement programs such as welfare.

Gingrich’s comments came at a time when GOP House members were divided over how aggressively to use the debt-ceiling crisis to pressure Clinton into making concessions on the budget. Some fear a public relations drubbing of the sort Republicans suffered when they tried--without success--to use the partial shutdown of the government to win concessions from Clinton during budget-balancing talks.

To avoid another government shutdown, Gingrich said that GOP leaders are preparing to pass by Thursday another short-term spending bill to keep the government fully operating until March 1--more than a month after a temporary measure expires midnight Friday. He said that the measure would call for abolition of a dozen or more programs that “we know we have broad agreement to zero out.”

Gingrich said that Republicans want the program terminations to be a “down payment” on balancing the budget because negotiations with the White House on a formula to achieve balance by 2002 “are for all practical purposes not functional.”

The Republican focus has turned from the stopgap spending bill to the debt ceiling because the Treasury Department has been warning that it faces a new borrowing crunch in mid-February. Congress in November passed a bill to raise the $4.9-trillion debt limit but Clinton vetoed it because it also would have limited the Treasury Department’s ability to use certain accounting maneuvers to avoid default.

Since that veto, Rubin has been using those very accounting maneuvers to keep from breaching the debt ceiling.

Republican leaders said that they are having a hard time taking Rubin’s latest threats of dire consequences seriously because they resemble his predictions in November, which proved baseless.

To gain the two weeks beyond Feb. 15, the previous deadline set by the administration, Rubin said in his letter that he would:

* Tap $3.9 billion in the Exchange Stabilization Fund, which dates back to the 1930s and is used to stabilize currencies in international markets. The fund would be left with $17 billion, mostly in German marks and Japanese yen, for emergency intervention in currency markets.

* Permit the Federal Financing Bank, which lends money to quasi-governmental agencies, to exchange about $9 billion in notes it holds in its portfolio for an equal amount of Treasury securities held by certain government trust funds.

* Extend by two months, to a maximum period of 14 months, his debt-issuance suspension, allowing the redemption of $6.4 billion in additional Treasury debt held by the Civil Service Retirement and Disability Fund.