NEW YORK — Speaker John Boehner came here Monday to lend a peek to a worried Wall Street and a concerned Washington as to where he stands as the nation rapidly approaches its statutory debt ceiling.What they heard was that he feels no urgency.
The Ohio Republican used a speech to the Economic Club of New York to unveil a staunchly conservative plan to offset a debt ceiling hike with spending cuts of a greater amount, putting House Republicans on a collision course with Democrats who want much more modest spending restrictions attached to the vote.
He also told a packed, well-dressed ballroom at the Hilton New York that the debt limit has no “hard date” — a sign he does not take seriously the Democrats’ dire warnings of default in a few months.
And he reaffirmed that reforming the popular program Medicare is fully on the table in the negotiations, that tax hikes are a non-starter, and that defense spending deserves a look but vowed to not raise the debt ceiling without what he dubs “real action to solve our long-term economic problems.”
And he left through a side entrance before dinner even began.
In sum, Boehner’s plan here was bold in broad strokes, but safe enough that it offered no true specifics that will hamstring him in the future. For example, he didn’t vow to let the debt ceiling lapse if doesn’t get the hike offset. He didn’t box himself in on any plan, including a plan favored by House Majority Leader Eric Cantor (R-Va.) to let U.S. coporations bring corporate profits back home at a lower rate — Boehner said it can only come with fundamental tax reform.
But what was most monumental was Boehner’s laying a marker that will set the stage for interesting negotiations with Congressional Democrats and the White House as they work to find a solution to raising the debt ceiling.
“Without significant spending cuts and reforms to reduce our debt, there will be no debt limit increase,” Boehner said. “And the cuts should be greater than the accompanying increase in debt authority the president is given. We should be talking about cuts of trillions, not just billions.”
Not meeting that target could upset conservatives when the debt ceiling is eventually raised.
Otherwise, Boehner tried to lighten the mood as much as he could in a room filled with wingtips and conservative dark suits. He joked with billionaire Peter G. Peterson, saying he should pay health insurance premiums. The two-decade veteran of Washington tried to strike a populist, outsider tone, telling New Yorkers that he’s “not from around here” and that “Washington’s arrogance has triggered a political rebellion in our country.”
The rebellion he might see could come from Democrats in D.C., who are sure to seize on Boehner’s contention that there “really is no hard date when it comes to increasing the debt limit.” It will serve to embolden Democrats like Sen. Charles E. Schumer (D-N.Y.), who urged the speaker to guarantee a debt limit increase during his visit here. He didn’t come close to doing that. In fact, he emphatically said he wouldn’t allow a hike without reforms and cuts.
“As I said earlier, not increasing the debt ceiling would be irresponsible,” Boehner said in one of the night’s unscripted moments. “Having said that, I do not want to allow this moment that we have in our history to pass without real action to solve our long-term economic problems.”
That fact that Boehner took his case directly to Wall Street is significant — the Republican leader clearly wanted to send a message to the markets that he’s got a strong plan for a debt limit package that reigns in spending while allowing more debt to be accrued. Boehner noted that the crowd was probably “uneasy,” but that unease could have been compounded when he said raising the debt ceiling “without simultaneously taking dramatic steps to reduce spending and reform the budget process” would be “more irresponsible” than allowing the nation to default on its debt.
That’s why this address was just as important for those inside the Beltway as it was for financial titans: It was the first peek behind the curtain at how Boehner is positioning himself. For his part, Cantor has a series of closed events Tuesday with the financial community, including executives at the New York Stock Exchange.
The chief concern that Wall Street is trying to balance is the need for deficit reduction vs. the likelihood that the nation needs to borrow more money.
The proposals Boehner unveiled in New York were bold in how far they tacked to the right and how high he set the bar for spending cuts. For example, under Boehner’s vision, Republicans would have to find more than $2 trillion in cuts if they wanted to raise the debt ceiling by that amount through 2012, according to the Treasury department’s estimates on the debt limit. But Republicans could also go for a more incremental increase in the debt ceiling, coupling that with a smaller offsetting cut in spending. Boehner’s preference is for immediate cuts, not promises to pare back spending in the future or set triggers for deficit reduction.
But by mentioning “trillions” in long-term cuts, Boehner is clearly putting entitlement reform in play — including Medicare — since it would be nearly impossible to cut trillions without affecting entitlement spending. He also said defense spending, the needs a “fundamental review” because the department “does not spend their 600-plus billion dollars every year as efficiently as you would spend your money or I would spend mine,” Boehner told Peterson in the question-and-answer portion.
Boehner said, “Everything is on the table … that includes honest conversations about how best to preserve Medicare, because we all know, with millions of Baby Boomers beginning to retire, the status quo is unsustainable. If we don’t act boldly now, the markets will act for us very soon.”
Defense spending, the speaker said, needs a “fundamental review” because the Defense Department “does not spend their 600-plus billion dollars every year as efficiently as you would spend your money or I would spend mine,” Boehner told Peterson in the question-and-answer portion.
Politicking, though, was never far behind. In his address, calling out Democrats, Boehner said that the “mere threat of tax hikes causes uncertainty for job creators — uncertainty that results in less risk-taking and fewer jobs.”
Playing to the crowd, Boehner also said that financial regulatory reform passed under Democrats – a law known as Dodd-Frank – was “all wrong.”
Once again, the speaker also reiterated that reforming Medicare should be a part of the negotiations, something that congressional Democrats and the Obama administration have been averse to. Boehner used the opportunity to come out against debt and deficit targets, rather preferring immediate cuts to programs that amounts to trillions in slashes, not billions.
“To increase the debt limit without simultaneously addressing the drivers of our debt — in defiance of the will of our people — would be monumentally arrogant and massively irresponsible,” Boehner said, brushing back on Democrats who are calling for a clean vote. “It would send a signal to investors and entrepreneurs everywhere that America still is not serious about dealing with our spending addiction. It would erode confidence in our economy and reduce certainty for small businesses. And this would destroy even more American jobs.”
It’s too early to tell how Boehner’s plan will play with House Republicans. Some hard-line conservatives would rather have a separate debate on entitlement reform, one that involves hearings and separate legislation, others won’t settle for any debt limit increase without entitlement reform.
As Boehner makes his pitch on the debt limit, Vice President Joseph R. Biden is hosting deficit talks at the White House this month, but no one is truly sure if the panel is a sideshow or the main stage for debt ceiling increase legislation. Boehner and Obama are widely expected to cut the final deal.
In a sign of fresh involvement, the White House announced Obama would meet with Senate Democrats and Senate Republicans this week, followed by House lawmakers in the coming weeks.
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