Analysis: Boehner faces huge stakes in debt debate

U.S. Speaker of the House John Boehner (R-OH) listens to questions about a meeting with U.S. President Barack Obama on the deficit and debt at the White House in Washington, June 1, 2011.

WASHINGTON (Reuters) - Republican John Boehner faces his greatest test yet as the leader of the U.S. House of Representatives, one that may determine his political fate and the country's fiscal well-being.

Boehner has navigated Congress' shark-infested waters for 20 years, but the negotiations he is about to have with President Barack Obama over how to raise the U.S. debt limit will test his political skills like never before.

With debt talks led by Vice President Joe Biden collapsing on Thursday -- after a surprise walk out by Boehner's deputy Eric Cantor -- the House Speaker now finds Republican responsibility for averting a U.S. default resting squarely on his <<shoulders.

Republicans and Democrats have said for months that any final deal will have to be hammered out by Obama and Boehner, so this new, critical phase of debt talks -- which will also include Democratic Senate leader Harry Reid -- is not unexpected.

Yet some on Capitol Hill believe Cantor's walk-out over Democratic demands for tax increases during the budget talks was to burnish his conservative credentials with the party's fiscally conservative Tea Party caucus -- leaving Boehner to craft a deal many rank-and-file Republicans will oppose.

"Cantor threw Boehner under the bus," said one Democratic aide.

The stakes for Boehner are high. To get a debt-limit deal through the House of Representatives by August 2, when the U.S. Treasury says the federal government will begin to default on its obligations, he will likely need Democratic help.

Yet he will struggle to get enough Democratic votes to raise the $14.3 trillion debt ceiling if a corresponding package to slash the long-term deficit -- the focus of negotiations with Obama -- does not include tax increases as well as spending cuts.

Any package that includes an increase in taxes will be rejected by House Republicans, leaving Boehner with a difficult choice. Does he accommodate Democratic demands to strike a deal and avoid default despite his own party's revolt or does he stand ground on the tax issue and risk a dangerous failure to extend the borrowing cap of the United States?

"I don't know how he does it," said Tad Devine, a Democratic strategist. "Boehner is a reasonable person and somebody who understands the consequences of default. The stakes are enormous here, and this is a very risky situation for him. He risks losing control of his own caucus."

TEA PARTY PRESSURE

Fiscally conservative Republicans swept into power in the House last year due in large part to a Tea Party movement that drew promises from lawmakers of lower spending, lower taxes and reduced debt.

Many Tea Partiers have voiced discontent with Boehner, complaining he has not demanded big enough cuts and that they would like to see him challenged in next year's Republican primary.

Chris Littleton, a Tea Party leader in Boehner's Ohio congressional district, rejected talk of trying to unseat Boehner, and said, "under the circumstances, he hasn't done too bad."

But Littleton said Boehner should "stay strong" in the debt-limit showdown.

"We don't want to see the debt limit raised at all," Littleton said. "But I know there is going to have to be some sort of compromise."

Jack Howard, a Republican lobbyist who in the 1990s helped foil an attempted coup by Boehner and other Republicans against then-Speaker Newt Gingrich, says any deal will be "difficult" for Boehner. But he said it would be foolish to underestimate his ability to get things done.

"He is the kind of guy who enters the revolving door behind you and comes out ahead of you. You're never quite sure how he does it. Boehner's a pretty skilled negotiator," Howard said.

One Republican said the only way for Boehner to get a deal through the House of Representatives will be to "twist arms and grant favors, and use the power of the Speakership."

The impasse over taxes continued on Friday. In a statement, Boehner said: "The president and his party may want a debt limit increase that includes tax hikes, but such a proposal cannot pass the House."

The White House meanwhile insisted on a "balanced" approach to curbing the deficit, saying that a deal must include revenue raising measures as well as spending cuts.

Kevin Madden, a Republican strategist, said although this is a difficult situation for Boehner, the Republican "has the most leverage in the room".

Madden said: "He has made it clear from the beginning. Tax hikes are off the table, and he's aligned with public sentiment on this. It's the president who is going to have to move toward Boehner on this."

(Additional reporting by Thomas Ferraro, Editing by Anthony Boadle)