US Lawmakers Considering Higher Federal Government Debt Ceiling
By Corey Boles, Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- Two senior U.S. congressional Democrats said Thursday
they are considering a broader increase in the nation's debt ceiling to avoid
having to raise the cap again next year on how much the federal government can
borrow.
Sen. Kent Conrad (D., N.D.) and Rep. John Spratt (D., S.C.), the respective
chairmen of the Senate and House Budget committees, both said the notion of
holding a vote on increasing the debt ceiling shortly before the 2010 election
would be politically difficult.
"It can be a problem in the markets if you're doing debt ceiling increases
around elections, because [foreign investors] then become concerned that the
U.S. might default on its debt," Conrad said.
If the U.S. public debt breaches its ceiling, the federal government would be
forced to default on its debt. This could lead to a lowering of the U.S. credit
rating and the government having to pay substantially higher interest rates to
investors.
The current cap on what the federal government can borrow is $12.1 trillion.
The Treasury said this week it could hit this ceiling by mid-December. In fiscal
2009 alone, the federal budget deficit reached $1.4 trillion.
Earlier this year, the House approved an increase in the debt ceiling of $925
billion, which would bring the total to just over $13 trillion.
Thursday, Spratt said if the Senate simply moved to adopt that increase, the
new debt limit would likely be reached by next summer.
"If we did just the $925 billion it would carry us into next summer, so it
would have to be done again," Spratt said.
He said the "better and simpler solution" would be to do a single increase
that would last through next year.
A senior aide said to House Speaker Nancy Pelosi (D., Calif.) said House
leaders would prefer that the Senate take up the $925 billion House increase,
but are open to an extension of the debt ceiling through 2010.
Conrad, Spratt and other lawmakers said that no decisions have been as to what
level the ceiling might be raised to.
Sen. Ben Nelson (D., Neb.), one of the most moderate Senate Democrats, said he
was opposed to the idea of rising the debt ceiling because it is politically
easy.
"To avoid votes because of the political consequences and then to do something
that gives more authority than you need," Nelson said. I'm certainly not in
favor of raising it higher just so I don't have to deal with it again."
Some lawmakers, including Conrad, have been pushing for the creation of a bi-
partisan commission to come up with recommendations to tackle the long-term
federal fiscal imbalances.
Last month, several moderate lawmakers sent a letter to Senate Majority Leader
Harry Reid (D., Nev.) asking him to link any increase in the debt ceiling to the
establishment of such a commission.
One proposal last year that was backed by Conrad and his counterpart on the
budget committee, Sen. Judd Gregg (R., N.H.) would establish a panel of 16
people - 14 lawmakers and two administration officials - to come up with a
package of cuts.
Congress would then have to vote up or down on the entire package of cuts
without being able to amend it.
The proposal hasn't been reintroduced yet.
Next week, the budget committee is scheduled to hold a hearing to consider the
various proposals to create such a panel. There are a number that have been put
forward, some of them several times over the years.
The budget committee hopes to release details of a single plan in the coming
weeks.
But there is considerable resistance in some quarters to the idea of handing
control of decisions over long-term spending to an outside panel.
Pelosi said Thursday that she "had not been supportive of the commission as it
has been formulated so far."
Nelson said he would object to any move to cede responsibility and authority.
Rep. Paul Ryan (R., Wis.), the senior Republican on the budget panel, said he
would prefer Congress "does our job" but that he wouldn't oppose the creation of
a panel outright.
"The way I look at a commission is, it's a punt, but at least the ball is
still on the field."
-By Corey Boles, Dow Jones Newswires; 202-862-6601; corey.boles@dowjones.com
(END) Dow Jones Newswires
11-05-091858ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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