By law, the government’s total debt cannot exceed $4.9 trillion.
House Speaker Newt Gingrich backed away Wednesday from an offer to extend the government’s borrowing authority temporarily, saying Clinton administration warnings of a crisis by Halloween could not be trusted.
In the latest exchange in a war of nerves, the Georgia Republican said Treasury Secretary Robert Rubin’s projections that the federal debt limit would be reached Oct. 31 could be “a Halloween trick to try to scare people.” Before agreeing to raise the debt ceiling for even a short time, Republicans would insist that Rubin provide details of the government’s borrowing needs and would like to discuss the issue with President Clinton, Gingrich said.
“In the next couple of days, if the president wants to sit down, we’ll be glad to meet with him,” Gingrich said after a meeting Wednesday evening with Federal Reserve Chairman Alan Greenspan and Senate Majority Leader Bob Dole, R-Kan.
Before that session, Dole was more conciliatory. Although he accused Rubin of “scare tactics,” he said, “I can guarantee that we in the Congress will work hard to see to it that there is no default by the U.S. government on its obligations.”
Nonetheless, White House spokesman Mike McCurry, expressing administration chagrin, said the standoff over federal borrowing “is now apparently going to be a crisis because Congress won’t act to extend the debt ceiling.”
Both sides know that neither would benefit if a failure by Clinton and Congress to break the impasse leads to an unprecedented default. The likely results of that would include higher interest rates, tumult in the financial markets and possibly greater interest in a third-party presidential candidate.
Nonetheless, Republicans plan to tie the debt-limit increase to their seven-year package for balancing the budget and cutting spending and taxes. It is a strategy lawmakers long have used to force presidents to handle issues they would rather avoid.
The administration, on the other hand, wants to see the debt limit extension separated from the budget issue, which would make it easier for Clinton to veto the GOP budget package. White House officials say that ideally, they would like to see the debt limit extended until after the 1996 elections or at least until this Christmas, when the year’s budget work may be completed.
Democratic leaders met with Clinton and discussed the debt limit as well as GOP proposals to cut Medicare and Medicaid. They warned that Americans with variable mortgage rates would suffer if the debt-limit dispute drives up interest rates.
Homeowners “are going to pay more per month because of the irresponsibility of the speaker and Bob Dole and the Republicans,” House Minority Leader Dick Gephardt, D-Mo., said.
By law, the government’s total debt cannot exceed $4.9 trillion. The Treasury had said that limit would be reached Oct. 31, though the limited borrowing plans it announced Tuesday pushed that back a few days.
The Treasury can resort to other strategies that could avert default, some of which could keep the government paying its debts for months. But some of these, such as shifting large amounts of money from trust funds for Social Security and other programs, would be politically risky.
On Tuesday, the Treasury said it would scale back sharply its short-term borrowing plans to help stay within limits. It blamed the disruption on recalcitrant Republicans.
Shortly afterward, Gingrich said lawmakers would agree to raise the limit until mid-November. That is when Republicans hope to have their balanced-budget package ready for Clinton, who has pledged to greet it with a veto.
But after meeting with House GOP lawmakers Wednesday, Gingrich said he and Dole would consult before deciding whether to support extending the limit until Nov. 14.