Government shutdowns are bad, but increasing the federal debt ceiling this fall without deep cuts in federal spending would be even worse, House Speaker John Boehner declared yesterday in a stark challenge to President Barack Obama.
In a speech before an organization that champions balanced budgets, the West Chester Republican adopted a tough line, saying that the looming debate over the federal debt ceiling would be "an action-forcing event in a town that has become famous for inaction."
"Yes, allowing America to default would be irresponsible," Boehner said. "But it would be more irresponsible to raise the debt ceiling without taking dramatic steps to reduce spending and reform the budget process.
"When the time comes, I will again insist on my simple principle of cuts and reforms greater than the debt-limit increase," Boehner said. "This is the only avenue I see right now to force the elected leadership of this country to solve our structural fiscal imbalance."
Democrats pounced on Boehner's speech.
Sen. Charles E. Schumer, D-N.Y., said, "it is pretty galling for Speaker Boehner to be laying down demands for another debt-ceiling agreement when he won't even abide by the last one. The last thing the country needs is a rerun of last summer's debacle that nearly brought down our economy."
Obama likely will ask Congress to increase the government's debt ceiling after the November election. Without an increase in the government's ability to borrow, the government faces the possibility of a default.
In addition, the nation faces the prospect of a broad array of tax cuts expiring at the end of the year, including investment, income and payroll-tax cuts that affect all Americans. And shortly after the first of the year, the first round of an eventual $1.2 trillion in automatic spending cuts go into effect.
During his speech before a fiscal summit sponsored by the Peter G. Peterson Foundation, Boehner also castigated Obama, charging that he "lost his courage" in August in the intense debt-ceiling negotiations that brought the federal government to the brink of default.
He complained that Obama was not willing last year to buck Senate Democratic demands for higher taxes on wealthier Americans. Those taxes were opposed by House and Senate Republicans.
While Boehner ruled out increasing taxes, which he said "would hurt our economy," he did nudge the door open for increased federal tax revenue through an overhaul of the tax code. He said such an overhaul would include lower "rates for individuals and businesses while closing deductions, credits and special carve-outs."
"And if we do that right, we will see increased revenue from more economic growth," Boehner said.
Boehner said the House will vote this year to extend all the tax cuts scheduled to expire at the end of the year. He said as part of that bill, he would attach a measure that would "establish an expedited process" for Congress to draft a broader tax-overhaul package.
"We can't wait," Boehner said. "Employers large and small are already bracing for the coming tax hikes and regulations, which freeze them in place. The markets aren't going to wait forever -- eventually, they're going to start reacting."
But Boehner's stance, while pleasing House conservatives, could provoke a shutdown. Obama and Senate Democrats have made clear they want to raise taxes on individual taxpayers with an adjusted gross income of at least $200,000 annually and families earning more than $250,000.
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