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Tea Party Scorns Republicans as House Lifts Debt Ceiling

By Michael C. Bender and Laura Litvan
February 12, 2014 10:13 AM EST 951 Comments
House Speaker John Boehner and many in his leadership team were among the 28 Republicans who joined with Democrats to pass a suspension of the debt ceiling until March 15, 2015. The vote was 221-201.
Photographer: Pete Marovich/Bloomberg
House Speaker John Boehner and many in his leadership team were among the 28 Republicans who joined with Democrats to pass a suspension of the debt ceiling until March 15, 2015. The vote was 221-201.

House Republican leaders sought to shield themselves from blame for another round of U.S. fiscal uncertainty by advancing a debt-limit increase without strings.

Small-government groups are blaming them anyway for yesterday’s vote. They’re accusing them of abandoning Republican principles and are vowing to extract a political price in this year’s congressional elections.

Today, Senate Majority Leader Harry Reid, a Nevada Democrat, urged Republicans in his chamber to follow their House counterparts and allow a vote on the debt-limit bill to send it to President Barack Obama for his signature.

“We should wrap this up today,” Reid said on the Senate floor. “I hope we can vote on this and vote soon.”

The Debt Ceiling as a Political Crowbar

House Speaker John Boehner and many in his leadership team were among the 28 Republicans who joined with Democrats yesterday to pass a suspension of the debt ceiling until March 15, 2015. The vote was 221-201.

“The House leadership has given up any pretense of fighting for fiscal responsibility,” Matt Kibbe, president of Washington-based FreedomWorks, a Tea Party-backed group, said in an interview yesterday. “We need to add more members of Congress in 2014 that want to come here and tackle the budget and tackle the national debt.”

Groups aligned with the small-government Tea Party movement pledged to recruit challengers for lawmakers seeking re-election and provide financial support to their campaigns.

Difficult Choice

For Boehner, the vote was a replay of the difficult political choice he’s faced for the past three years -- how to appease Tea Party-backed members without risking a government shutdown or a U.S. default. Republicans were blamed in public approval polls for the October fiscal impasse, and Boehner didn’t want a repeat, even if it meant frustrating a wing of his party.

Republicans’ divisions on spending helped provoke the 16-day partial shutdown in October. The divide also has weakened Boehner’s negotiating position with Obama and Reid, who stuck to their refusal to consider conditions for raising the debt limit.

Reid praised Boehner today, saying the speaker has “one of the most difficult jobs in Washington, especially when you look at the caucus that he has to deal with.” Reid said it’s “too bad” that some Senate Republicans were trying to block the measure in that chamber.

60 Votes

Senator Ted Cruz, a Texas Republican aligned with the Tea Party, said yesterday he’ll push to require a 60-vote threshold in the chamber for a debt ceiling increase.

“Republicans in the Senate and House should stand united” he told reporters. “Stop digging the debt-hole deeper and deeper.”

A suspension of the U.S. debt limit enacted by Congress in October expired Feb. 7. Treasury Secretary Jacob J. Lew said last week that borrowing authority may not last past Feb. 27.

Rates fell on Treasury bills due on March 6, maturing after the Feb. 27 date on which Lew said the U.S. would exhaust extraordinary measures to keep under the debt limit. The rate fell by 50 percent to 0.025 basis points.

Two Democrats, Jim Matheson of Utah and John Barrow of Georgia, joined most House Republicans in voting against the measure yesterday.

Besides Boehner, among Republicans voting for the bill were House Majority Leader Eric Cantor of Virginia, Ways and Means Committee Chairman Dave Camp of Michigan and Appropriations Committee Chairman Hal Rogers of Kentucky.

Business Groups

Business groups urged Congress to raise the debt ceiling as soon as possible to assure companies that the U.S. government won’t default on its obligations.

The U.S. Chamber of Commerce, the country’s largest business lobbying group, said in a letter to lawmakers Feb. 10 that quick passage would avoid “collateral stresses so often inflicted during similar episodes in recent years.”

The House vote, coupled with a two-year budget agreement in December, “will effectively put fiscal policy on auto pilot” until well past the November election, said Charles Gabriel, a policy analyst at Capital Alpha Partners in Washington.

Anne Van Praagh, Moody’s Investors Service managing director and chief credit officer, said the House vote was a “positive development.”

‘Good Thing’

“A further lack of consensus would have potential negative consequences for the market and the economy,” Van Praagh said in an interview. “The fact that we’ve averted that is a good thing.”

Groups aligned with the Tea Party movement went on the attack.

Andy Roth, the top lobbyist for the Washington-based Club for Growth, an anti-tax group, said in an e-mail to congressional offices that he thought it was a “joke” when he heard Boehner was allowing a measure on the House floor that raised the debt ceiling without conditions.

Barney Keller, a spokesman, said in an interview that the vote will be one of those considered when Club for Growth decides which lawmakers it will support and oppose. The group operates a super-political action committee that will spend millions of dollars in this year’s congressional election.

Senator John McCain of Arizona, the 2008 Republican presidential nominee, said Boehner’s decision to move a debt ceiling increase without strings attached shows Republicans lost standing with the public since the government shutdown.

‘Overwhelmingly Rejected’

“The American people overwhelmingly rejected the shutdown of the government,” McCain said, pointing to polls that showed Republicans took the bulk of the blame. “Americans don’t like government, but they don’t want it shut down. It was an object lesson for Republicans.”

House Minority Whip Steny Hoyer, a Maryland Democrat, said the issue comes down to whether the U.S. will make good on its obligations to debt-holders and provide stability by boosting the limit.

“Will America pay its bills?” Hoyer said on the House floor before the vote. “Will it give confidence to the business community? Will it give confidence to its own citizens? Will it indeed give confidence to the world?”

The U.S. Congressional Budget Office reported last week that the budget deficit this year will be the smallest as a share of the economy since 2007 as stronger economic growth boosts tax revenue.

Narrowing Deficit

The CBO said the deficit will narrow to $514 billion this fiscal year, or 3 percent of gross domestic product, from $680 billion in 2013 before surging to $1.07 trillion in a decade.

Polls show that the issue of deficit reduction is declining as a priority for U.S. adults. A Jan. 15-19 poll by the Pew Research Center found that for the first time since Obama took office, the deficit slipped as a top item, with 63 percent of those polled saying that closing the budget gap should be a top priority for Congress and the White House. That’s down from 72 percent a year ago.

The poll of 1,504 adults had a margin of error of plus or minus 2.9 percentage points.

To contact the reporters on this story: Michael C. Bender in Washington at mbender10@bloomberg.net; Laura Litvan in Washington at llitvan@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net

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