House GOP Backs Off Debt Ceiling Demands

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SCOTT SIMON, HOST:

This is WEEKEND EDITION from NPR News. I'm Scott Simon. House Republicans spent the last two days at a resort outside of colonial Williamsburg, Virginia. It was their annual retreat and it ended in what many consider to be at least a tactical political retreat. After insisting for weeks on a dollar in spending cuts for every dollar that they would agree to raise the debt ceiling, Republicans dropped that demand, at least for the next three months. NPR's David Welna was at that gathering and he reports that Republican lawmakers are now pinning their hopes for deficit reduction on other looming budget battles.

DAVID WELNA, BYLINE: There was tough talk from House Republicans as they left Washington earlier this week to plot strategy at a golf resort. Some said the Treasury did not have to technically default on the debt; it could just stop making some of its payments. Others said financial markets might actually respond positively to Republicans holding out for big deficit reductions. By the end of their retreat here, though, Republicans seemed to come around to share the view of their leaders, that risking a debt default could spell political disaster for the GOP brand. So, instead of provoking a showdown over a debt ceiling that had to be raised by mid-February, Republicans now plan to raise the nation's borrowing limit enough to keep the Treasury in good stead until Tax Day in mid-April. And attached to that short-term extension would be another condition: that senators' paychecks will be withheld until they pass an annual budget.

REPRESENTATIVE MICHAEL MCCAUL: The Senate needs to do its work and pass a budget for the first time in three years.

WELNA: That's Texas House Republican Michael McCaul. He says while Republicans are willing to give the federal government a three-month breather on the debt ceiling, it won't be for nothing.

MCCAUL: The debt ceiling, obviously, is going to be the toughest vote for all of us. But we need to get something in return for that. And I think that was pretty unanimous.

WELNA: But what was also unanimous, according to some attending the closed-door sessions of the GOP retreat, was a realization that Republicans could get burned badly if they brought the nation to the brink of default, just as they did in August of 2011 when the nation's debt rating was downgraded for the first time ever. John Fleming is a Tea Party-backed Republican from Louisiana.

REPRESENTATIVE JOHN FLEMING: We have no interest in shutting government down or depriving anybody of their benefits, even though we need so desperately to cut spending.

WELNA: Fleming says while there was discussion here of prioritizing payments by the Treasury if its borrowing authority were to run out, such a scenario is highly unlikely.

FLEMING: What theoretically could happen is that checks wouldn't go out or they'd be delayed. But we're not even going to let that happen. I mean, the American people need to feel safe that come the first of the month, or whenever they get their Social Security check, their veteran's benefit - whatever government check that they normally get - that that check is going to be there for them. We're not going to let them down.

WELNA: And is that the case the leadership made to the members?

FLEMING: No. To be honest, I think it's just an intuitive thought that we all have. I mean, nobody is standing up saying, well, let's make sure the military doesn't get paid and that'll really win the battle for us. That just isn't happening, and for good reason.

WELNA: Raising the debt ceiling is not the only fiscal fight ahead. There's also a March 1st deadline looming when more than $100 billion in automatic across-the-board spending cuts, known as the sequester, will begin. And near the end of March, a stopgap resolution keeping the federal government operating runs out. South Carolina Republican Mick Mulvaney says the plan is to leave the fight over raising the debt ceiling over the long term for last.

REPRESENTATIVE MICK MULVANEY: Why wouldn't we deal with the smaller ones first, maybe build up a little momentum, build up a little credibility, not only with the credit markets but also with the folks back home, that we could actually deal with these things - take the small one first, take the medium one next and then take the debt ceiling last. I think it makes perfect sense. It's a rational, reasonable thing to do.

WELNA: For House Republicans, it may be. But Senate Democrats say they want the debt ceiling raised with no conditions attached. David Welna, NPR News, Williamsburg, Virginia. Transcript provided by NPR, Copyright NPR.