As House Republicans meet for their annual retreat to plot strategy, Senate Republicans have a message for them — don’t even think about denying a debt-ceiling increase. John Cornyn told the Houston Chronicle that Republicans will vote to raise the debt ceiling before it hits:
Sen. John Cornyn of Texas, the Republican whip, said in Houston Thursday that Congress will not allow an impasse over raising the debt ceiling to result in the federal government defaulting on its spending obligations.
“We will raise the debt ceiling. We’re not going to default on our debt,” Cornyn told the Houston Chronicle editorial board. …
“I will tell you unequivocally, we’re not going to default,” Cornyn said Thursday.
Cornyn also said that a government shutdown might be necessary to keep the US from becoming the next Greece:
In an opinion piece in the Chronicle last week, Cornyn wrote that shutting down parts of government may be necessary if the White House and Congress cannot agree on a deal to slash spending.
“It may be necessary to partially shut down the government in order to secure the long-term fiscal well being of our country, rather than plod along the path of Greece, Italy and Spain,” he wrote. “President Obama needs to take note of this reality and put forward a plan to avoid it immediately.”
Technically, Congress doesn’t need to raise the debt ceiling to avoid a default, at least in theory. Debt obligations (interest) and entitlement payments are authorized by statute. As long as they can both be funded by current revenue, then the Treasury doesn’t need to borrow to meet those obligations — but that’s a big if, and revenue isn’t a consistent stream. It rises and falls cyclically during the year, and it’s possible that revenue might come up short at some point, at which time the US might go into technical default. Either way, it’s certain that the ratings agencies will punish the US with another downgrade for being in that position, which will make future borrowing much more expensive and create even more statutory outlays that can’t be controlled through the budget process.
Perhaps this isn’t a message to House Republicans, but one from them. Cornyn might be fronting the message to take the heat off of John Boehner. If so, he got some help from other members of the Senate Republican caucus:
Sen. Susan Collins (R-Maine) has also said that the debt ceiling must be raised. Sen. Lisa Murkowski (R-Alaska) has said the borrowing limit should not be used for leverage: “If you incur an obligation, you have a responsibility to pay for that,” she told the Fairbanks Daily News-Miner.
I suspect that the House will pass on the debt-ceiling fight to focus on the March 27th CR expiration, and that the Senate Republicans are trying to provide them some cover for that decision.
Update: Bloomberg reports that the House may pass a debt-ceiling extension that will underscore their messaging rather significantly:
Smart symbolism. RT @bloombergtv: BREAKING: House GOP considers extending debt limit to about April 15
— Joseph Weisenthal (@TheStalwart) January 18, 2013
A Republican aide on Capitol Hill tells me that it will also include a requirement for the Senate to pass a normal budget.