WASHINGTON — The top Republican in Congress wants trillions of dollars in spending cuts as part of must-pass legislation allowing the federal government to continue borrowing to keep it operating and meeting obligations to investors.
House Speaker John Boehner also said that any legislation to raise the so-called debt limit beyond its current $14.3 trillion cap should be accompanied by spending cuts larger than the amount of the permitted increase in the debt.
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The Ohio Republican was scheduled to make the comments in a speech Monday night to the New York Economic Club; excerpts were released after the markets closed. Boehner’s comments come as investors and business groups have been seeking assurances that the GOP-controlled House will join with President Obama and the Democratic-led Senate to enact the must-pass debt limit measure, which is needed to prevent a market-roiling, first-ever U.S. default on its obligations.
Treasury Secretary Timothy Geithner said a failure to increase the federal government’s ability to borrow would have disastrous effects on the economy.
“It’s true that allowing America to default would be irresponsible,” Boehner said. “But it would be more irresponsible to raise the debt ceiling without simultaneously taking dramatic steps to reduce spending and reform the budget process.”
The government is headed toward a $1.6 trillion deficit this year requiring it to borrow more than $125 billion a month.
It’s unclear how much of a debt limit increase is coming, but it would take a record increase in the $2 trillion range to avoid a second vote before next year’s elections.
The debt measure’s path through Congress promises to be extraordinarily difficult since the arrival of 87 House GOP freshmen – many elected with tea party backing last year – for whom the debt vote is politically difficult.
Boehner’s remarks are notable since it’s virtually impossible to produce spending cuts of that size without addressing major benefit programs like Medicare.
And they came less than a week after Majority Leader Eric Cantor, R-Va., and other top Republicans seemed to acknowledge that political reality would probably rule out such cuts before the 2012 presidential and congressional elections.
A GOP budget blueprint that passed the House last month calls for transforming Medicare from a program in which the government directly pays medical bills into a voucher-like system in which future beneficiaries – those currently 54 years old or younger – would receive subsidies for purchases of private insurance plans.
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