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There's something unsettling about Newt Gingrich being the most reasonable voice in the room. Gingrich, the former U.S. House speaker who went to war with President Bill Clinton on budget issues in the 1990s, forcing two shutdowns of government operations, is cautioning Republicans not to create yet another crisis related to the debt limit.
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The country reached its $16.4 trillion debt ceiling New Year's Eve and Treasury Secretary Timothy Geithner has been juggling ever since. Geithner warned last week he can't keep that up much longer and action needs to be taken before mid-March, probably earlier.
"The fact is the Republicans have two much better arenas in which to fight over spending," Gingrich said last week on "CBS This Morning." "They have a continuing resolution, which funds government, which comes up at the end of March. And they have the sequester, which automatically cuts spending unless it's dealt with. And [on] those two fronts they can fight and they have much less resistance from the average American, and it's much harder for the president to oppose them."
The last time Republicans attempted to force spending cuts by holding a vote on raising the debt ceiling hostage was August 2011 and the confrontation led ratings agencies to lower the U.S. credit rating, making it more expensive for the government to borrow money. Fitch already has warned it will reduce the U.S. credit rating if there is another protracted struggle this time around.
Congress has voted to raise the debt ceiling more than 100 times since 1940 -- 18 of them under President Ronald Reagan -- in what had become a routine vote.
At his final news conference before the end of his first term, President Obama argued raising the debt ceiling has nothing to do with authorizing new spending.
"It simply allows the country to pay for spending that Congress has already committed to. These are bills that have already been racked up and we need to pay them," Obama said.
"If congressional Republicans refuse to pay America's bills on time, Social Security checks and veterans' benefits will be delayed. We might not be able to pay our troops, or honor our contracts with small business owners. Food inspectors, air traffic controllers, specialists who track down loose nuclear material wouldn't get their paychecks," the president said.
"Investors around the world will ask if the United States of America is, in fact, a safe bet. Markets could go haywire. Interest rates would spike for anybody who borrows money -- every homeowner with a mortgage, every student with a college loan, every small business owner who wants to grow and hire. It would be a self-inflicted wound on the economy. It would slow down our growth, might tip us into recession, and ironically, would probably increase our deficit."
Gingrich, who famously bounced a check that nearly kept him off the Republican primary ballot in Utah last year and said he would give statehood to a space colony during last year's failed attempt to win the GOP presidential nomination, accused the president of attempting to bully House Republicans, at the same time cautioning against forcing the issue.
"[But] I don't think we should pick fights where we're in a position that we can't in fact in the end enforce our will because we have no evidence that Barack Obama's going to compromise," Gingrich said.
Some 41 conservative groups, including the Club for Growth, Heritage Action, Citizens United, the National Taxpayers Union and Americans for Prosperity, signed a memo saying any increase in the debt ceiling should be tied to a balanced budget within 10 years. (Gingrich passed the first one since 1969 during his speakership for fiscal 1998.) It also calls on Congress to pass legislation to allow the administration to pick and choose which bills to pay when. Currently, Treasury pays bills in the order they come due.
At the GOP retreat at the Kingsmill Resort in Williamsburg, Va., last week Rep. Paul Ryan, R-Wis., the 2012 Republican vice presidential nominee and head of the House Budget Committee, floated another possibility: granting a short-term increase that would push the issue into March when Congress will be forced to deal with the sequestration. The House is expected to vote on a three-month extension later this week.
White House spokesman Jay Carney criticized such stop-gap measures.
"There is no way to mitigate the horrific economic consequences of default," Carney told reporters. "Choosing whether you pay Social Security beneficiaries or combat troops in Afghanistan, or veterans who depend on the VA for benefits, or bondholders -- these are choices that are about default.
"And the fact is default is not an acceptable option here. Congress has to simply do its job and pay the bills that they've already racked up, meet the obligations that they have already made. ... We're the United States of America; we are not a third-tier economy that goes month to month or every half year and casting doubt on whether or not we're going to meet our obligations. That's not who we are."
Republican Judd Gregg, former New Hampshire governor and U.S. senator (he was chairman of the Senate Banking Committee), warned it would be folly to hold the debt ceiling hostage.
"Taking this hostage gives the president and his minions in the press the opportunity to move the debate away from spending and into the arena of claiming Republicans are irresponsible and dysfunctional," he said in an op-ed piece in The Hill.
"The issue will become defaulting on the nation's debt and not sending out Social Security checks.
"The threat and possible execution of not paying Social Security because the debt ceiling is not extended is the ultimate political weapon, one the Democratic leadership will not hesitate to use.
Still some Republicans are digging in and eyeing at least a partial government shutdown while others are worried if they botch the issue they could lose the House majority in the 2014 midterm elections -- despite widespread gerrymandering.
Rep. Tom Cole, R-Okla., told The Hill voters will change the majority if they see it as "dysfunctional" -- a perception magnified by the inability of Speaker John Boehner, R-Ohio, to control his caucus during "fiscal cliff" negotiations.
A Pew Research Center poll indicates only 19 percent of Americans back the job Republican leaders did on the "fiscal cliff" while 48 percent gave a thumbs up to Obama. Even the conservative-leaning Rasmussen poll taken Dec. 30 gave Democrats an 11-point edge over Republicans.
Since it's so early in the 113th Congress, however, the GOP is hoping voters will forget whatever happens with the debt limit by the time the midterms roll around, party officials told The Hill. Democrats would need a net gain of 17 districts to retake the House and even though there are not as many swing districts as there used to be, Dems are eyeing 30 where incumbents won by less than 10 percent.
"We need to have a plan that unifies us going forward and a clear-cut strategy of what this next year, two years will look like," Rep. Charles Boustany Jr., R-La., told The Hill in advance of the Republican retreat. "I think unity's a big part of it, but you have to have a plan to unify around. So that's the overarching goal."
Republicans could opt to take the drama out of the debt ceiling in hopes of advancing proposals to cut at least $1 in spending for each $1 the ceiling is raised. Boehner told The Wall Street Journal he is toying with the idea of letting the sequestration -- an $85 billion across-the-board hit to defense and discretionary spending in 2013 -- take hold to give Republicans more leverage.
The disarray within the House Republican caucus may once again put the lead in the hands of Senate Minority Leader Mitch McConnell, R-Ky., who struck the "fiscal cliff" deal with Vice President Joe Biden that extended the Bush tax rates for those earning less than $400,000 (individuals) and $450,000 (couples). McConnell has said last-minute deal-making is "no way to run the government" and has called for a more orderly process: passing bills, conference committees and input from the White House.
