Avoiding Shutdown May Be Easier for GOP, Debt Default Less So

By Jonathan Nicholson

Sept. 25 — Did House Republicans trade a government shutdown for a potential default on the U.S. Treasury's debt?

With the announced retirement of House Speaker John Boehner (R-Ohio), that possibility looms larger.

The timing of Boehner leaving office, and the likely pressure on the succeeding leadership slate to prove their bargaining mettle as they face their first big confrontation with President Barack Obama, could bring the issue to the fore. Meanwhile, Boehner's retirement appeared to have eased passage of a temporary government funding bill through Dec. 11, probably avoiding a repeat of 2013's 16-day government shutdown.

The Treasury Department has said it expects to be able to borrow—and thus keep the government open—through late October and for a brief unspecified amount of time after that under the current $18.113 trillion debt limit. According to observers outside of government, the most likely time line for the Treasury to exhaust its borrowing capacity is late November or in December. Quarterly business taxes in September were flat and did little to change those expectations.

In his announcement, Boehner said his resignation from the speakership and his House seat will be effective Oct. 30, only a few weeks before the projected “drop dead” debt limit date and ahead of a second potential government shutdown date in December.

‘Another Five Weeks.'

Boehner has not said specifically whether he expects to be involved in crafting a strategy on the debt limit, though he appeared to leave the door open in comments at a press conference on Sept. 25.

“I'm going to be here for another five weeks,” he said. “And I'm not going to leave, I'm not going to sit around here and do nothing for the next 30 days. There's a lot of work that needs to be done. I plan on getting it as much of it done as I can before I exit.”

Since 2011, when Republicans won annual discretionary spending caps that are at the heart of the dispute over federal funding this year, the debt limit has been suspended three times. In the last two suspensions, Democrats have provided the overwhelming support for the suspension, with decreasing Republican support.

With the passage of a “no budget, no pay” bill (H.R. 325) in February 2013, Republicans provided 199 of the 285 “aye” votes to suspend the limit. But in October 2013, the next suspension (H.R. 2775) saw an almost complete reversal, with again 285 votes in favor but divided between 198 Democrats and 87 Republicans. In February 2014, the most recent suspension (S. 540) was carried by thinner 221-201 tally, with only 28 Republicans voting in favor, compared to 193 Democrats.

Large Debt Hike Needed

And the next suspension will likely carry a large price tag. With the debt subject to the limit set to hit $19.043 trillion by Sept. 30, 2016, according to the Congressional Budget Office, another suspension to push the issue past the November 2016 presidential election could allow the debt to rise by another trillion dollars.

With Boehner's resignation, the wing of the House Republicans most opposed to raising the debt limit, at least without significant concessions the White House is likely to balk at, is energized. Rep. Tim Huelskamp (R-Kan.) told reporters after the meeting where Boehner announced his retirement, “What I hear from the American people is I think they're going to be thrilled to death, both parties. They're ready for some change in Washington, particularly conservatives in the Republican Party. The base of the party has been asked for this change for two to three years and it's happening.”

Dan Holler, communications director for Heritage Action, the political arm of the Heritage Foundation think tank, told Bloomberg BNA that votes and stances on contentious issues between before the leadership elections will be examined by groups like his. “Those decisions are not free of consequences,” he said.

But Rep. Greg Walden (R-Ore.), the chairman of the National Republican Congressional Committee, said he did not think the debt limit would overshadow other issues during the leadership races. “I'm not going to say one issue's the defining issue. There are a lot of tough issues ahead of us. We need everybody pulling in the same direction,” he said.

Rep. Marsha Blackburn (R-Tenn.) said, “We'll see. Let's give it a little bit of time. Let's not try to predetermine everything.”

To contact the reporter on this story: Jonathan Nicholson in Washington at jnicholson@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com