White House signals opening on debt ceiling

After weeks of near silence without any hint of a potential compromise between the Obama administration and congressional Republicans over raising the nation’s debt ceiling, the White House may be offering some conciliatory language that could help lead to a deal to prevent a potential default on October 17, Fox59 reported.

As recently as Friday, White House officials declined to specify any demand for the length of a deal to increase the nation’s debt ceiling.

Then on Monday, a White House official said it was up to Congress to decide how long the debt ceiling increase should last.

“It is up to Congress to pass a debt limit increase, and up to them for how long and when they want to deal with this again,” the official told CNN. “We have been super clear we think longer is better because it lends more certainty.”

With parts of the government shut down for a week and counting, the focus of ending a deepening political stalemate is shifting to the upcoming deadline to increase how much the federal government can borrow. The reference to the length of a debt ceiling deal caused speculation that the White House might be signaling flexibility on the issue to legislators.

However, President Barack Obama reiterated Monday that he will not negotiate with Congress while the country was under threat of a possible debt default.

“We’re not going to establish that pattern,” Obama said, adding that “we’re not going to negotiate under the threat of a prolonged shutdown until Republicans get 100% of what they want” or under the threat of “economic catastrophe.”

White House spokesman Jay Carney later told reporters that “I’m not ruling out” a debt ceiling increase of any particular length of time. But he said he believed a longer one was better, because it would provide certainty after what Obama characterized as “manufactured crises” over similar brinksmanship in recent years.

“Our position is only that it ought not to be a political football, because it’s a dangerous political football,” Carney said. “And you know, fumbling that football can cost you a lot more than seven points. It can tank the economy.”

Economists warn of dire fiscal impacts from failing to raise what is called the debt ceiling, such as a reduced US credit rating that would spike borrowing costs. The economic blow and questions about America’s fiscal fidelity could bring a global slowdown, Obama has warned.

Analysts blamed concerns over the political impasse for another down day on Wall Street. All three major stock indexes fell, with the Dow Jones Industrial Average losing 136 points, or nearly 1 percent.

House Speaker John Boehner said Sunday there will be no debt limit increase and no end to the partial government shutdown that began October 1, unless Obama and Senate Democrats negotiate a broader agreement with House Republicans.

On Monday, he repeated his accusation that Obama was refusing to hold talks with Republicans, even with the looming threat of a default.

“The American people expect that when their leaders have differences and we are in a time of crisis that we will sit down and at least have a conversation,” Boehner said, adding that “it is time to have that conversation before our economy is put further at risk.”

Senate Minority Leader Mitch McConnell later said divided government means the two parties have to negotiate solutions.

“Until Senate Democrats accept that reality, these crises will only be harder to resolve,” McConnell, R-Kentucky, said.

However, one of Obama’s top economic advisers, Gene Sperling, told a Politico breakfast on Monday that “the era of threatening default has to be over.”

“If you sanction through negotiation the legitimacy of somebody threatening default, then that is going to happen over and over again,” Sperling said. “So sanctioning negotiations with someone threatening default is not going to end the risk of default. It is likely to increase the chances that we as a country eventually default or even perpetually threaten our full faith and credit.”

At issue is how to reach an agreement to fund the government in the newly started fiscal year and raise the $16.7 trillion debt limit.
Conservative Republicans intent on shrinking the government while trying to weaken Obamacare demand that any agreement on funding for the new fiscal year and raising the debt limit include their priorities.

“The debt ceiling is there for a purpose. It’s like the smoke alarm,” said House Financial Services Committee Chairman Jeb Hensarling, R-Texas. “Democrats want to unplug the smoke alarm, and Republicans want to go out and fight the fire.”
Boehner insisted that a deal to raise the debt ceiling must include deficit reduction steps that would lower costs of entitlement programs such as Medicare, Medicaid and Social Security.