Exclusive: Top Obama aide predicts drama-free U.S. debt ceiling increase

WASHINGTON Thu Jan 30, 2014 11:54pm EST

The sun sets behind the U.S. Capitol in Washington October 6, 2013. REUTERS/Jonathan Ernst

The sun sets behind the U.S. Capitol in Washington October 6, 2013.

Credit: Reuters/Jonathan Ernst

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WASHINGTON (Reuters) - A top White House official voiced confidence on Thursday that Republicans would agree in the next few weeks to lift the country's borrowing limit without using the confrontational tactics that rattled financial markets in past years.

White House Budget Director Sylvia Mathews Burwell said she believes there is less appetite on Capitol Hill for the messy fiscal standoffs that have taken place in recent years, such as the 2011 struggle over the debt limit and last October's budget fight that led to a 16-day shutdown of the government.

In an interview with Reuters, Burwell pointed to the passage earlier this month of a $1.1 trillion bill to keep the government funded for the next nine months.

The vote to approve the budget bill followed an agreement reached in December between Republican Representative Paul Ryan and Democratic Senator Patty Murray that included some deficit reduction along with a modest easing of automatic budget cuts known as the "sequester."

She said such deals suggested an interest in staying "away from a path of crisis" and said that bodes well for passage of a debt limit increase.

"How is it going to happen? I think it is going to happen," Burwell said. She noted that the U.S. Congress - with a Republican-led House of Representatives and a Democratic-led Senate - twice passed increases in the debt ceiling last year.

"We've gotten there twice before, and I think we will get there," she said.

Under a deal that ended the government shutdown in October, Congress suspended the debt ceiling until February 7. The government has cash-management tools it can use to temporarily stave off default, but Treasury Secretary Jack Lew has warned the government would exhaust its borrowing capacity by late February.

Republican lawmakers huddling at a bayside resort in Cambridge, Maryland, said they would insist on some concessions from President Barack Obama in return for raising the borrowing cap.

Republicans are scheduled to talk about their strategy on the debt limit on Friday, the final day of their three-day retreat. In exchange for raising the debt ceiling, they are considering asking for concessions ranging from expanded offshore energy production to small tweaks in Obama's healthcare law to approval of the Keystone XL oil pipeline.

In an interview on CNN on Thursday, Ryan said Republicans see the debt limit debate as a time to engage in a discussion on ways to rein in long-term debt and deficits.

"We will not default on our bonds as a country," Ryan said. "We know that's not a good idea, but we don't want to let the moment pass by without having a conversation about how can we make some improvements so we don't keep having these big debt ceiling problems day after day or year after year."

Burwell said comments from House of Representatives Speaker John Boehner and other Republican leaders suggest they believe that passing a debt limit increase is something that "just has to happen."

Even so, it was not clear how far the Republicans might push their demands for concessions with a White House that has said it will not negotiate over the debt-limit increase. Failure to reach a deal until the 11th hour has spooked investors in the past.

The debt-limit fights have been costly. In 2011, the standoff cost the United States to lose its top-tier credit rating from Standard and Poor's.

While it was unclear how close the Treasury came to a debt default last October, financial markets showed clear signs of stress, in some cases shunning what has traditionally been regarded as the safest, most liquid security on the planet: short-term U.S. Treasury debt.


The White House will unveil its annual budget proposal on March 4. Burwell declined to preview any details of the budget but offered an upbeat view of the nation's fiscal situation.

"We're at a place where there is more growth, energy and optimism," she said.

The Congressional Budget Office in November said the budget deficit for fiscal year 2013, which ended in September, was $680 billion. That was down from $1.089 trillion in 2012. The budget deficit peaked at $1.413 trillion in 2009, CBO said.

"With regard to the question of the long-term deficit issues, one of the main drivers of those costs is healthcare," Burwell said. "What we've seen is for the first time in 50 years we've had the lowest growth in healthcare costs and those kinds of things are important to contributing to that long-term problem."

Burwell would not comment on whether the president would renew his offer of reining in entitlement programs. Proposals in Obama's budget last year for curbing entitlement spending led to frictions with some congressional Democrats.

"We still think there are long-term deficit issues that you need to focus on," Burwell said. In the budget proposal, "you're going to see an emphasis on the kinds of investments we need to make in the short term, that are important to both short-term growth and long-term growth" such as spending on roads, bridges and ports, she said.

(With additional reporting by David Lawder in Cambridge, Maryland; Editing by Caren Bohan and Ken Wills)

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Comments (8)
runfast3 wrote:
I would like to know just where do politicians figure my social security or my medicare is an entitlement program. I paid into social security 55years and medicare ever since it started. Also I still pay 150.00 every month out of my social security deposit.

Jan 31, 2014 1:09am EST  --  Report as abuse
morbas wrote:
In the face of inaction, this amounts to mere flowered word play. We people do not have any progressive tax relief Senate Bills to rally for. In the face of any tax analysis, no movement. In the face of any gerrymander antidote, no movement. In the face of any NAFTA issues, no movement. An we the people cannot match the monetary dictate of SCOTUS, money ‘Trumps’ the pulpit ballot by subversion of truths; In each and every case, oppression of the peoples will is reinforce by delay of inaction. POTUS, Congress, Senate you political will is not the issue, it is your attitude that needs adjustment. People, write to the Congressional Sergeant of Arms, and demand that the House of Representatives doors be locked up tight, demand that monetary disbursements to the Representatives be ended. Direct the Senate to use direct vote of the people on every legislative bill, and enact a House of Representation convention vote. We the people have lost representation.

Jan 31, 2014 4:23am EST  --  Report as abuse
minipaws wrote:
IOUSA! Blessed are the children for they shall inherit the national debt.

Jan 31, 2014 8:12am EST  --  Report as abuse
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