After talking a big game for weeks, Republicans are caving on their threat to use the debt ceiling to hold the economy hostage. But only for now.
House Republicans said Friday afternoon they'll vote next week on a plan to raise the ceiling for three months. “Next week, we will authorize a three month temporary debt limit increase to give the Senate and House time to pass a budget,” House Majority Leader Eric Cantor said in a statement. “Furthermore, if the Senate or House fails to pass a budget in that time, Members of Congress will not be paid by the American people for failing to do their job.”
The threat to withhold pay may not be constitutional. That aside, the move represents a backtrack for the GOP.
For weeks, Republicans had been indicating that they'd refuse to raise the debt ceiling unless the White House would agree to immediate spending cuts of equivalent value. If the debt ceiling isn't raised by the beginning of March, the U.S. could default on its debt, with potentially disastrous results for the country's credit rating and the economy more broadly. But President Obama had insisted that he wouldn't negotiate over raising the ceiling, and pressure had been building on the GOP to relent.
“It is reassuring to see Republicans beginning to back off their threat to hold our economy hostage,” said Adam Jentleson, a spokesman for Senate Majority Leader Harry Reid. “If the House can pass a clean debt ceiling increase to avoid default and allow the United States to meet its existing obligations, we will be happy to consider it."
It's possible that the move could merely defer a confrontation over the debt limit until the spring. “Before there is any long-term debt limit increase, a budget should be passed that cuts spending,” said Speaker John Boehner.
But today's cave may be a sign that Republicans will never see using the debt ceiling for leverage as a winning play.
Still, in the meantime, GOPers will also have leverage thanks to the sequester, which will force $1 trillion in major spending cuts starting March 1, if there's no deal on a budget that achieves significant deficit reduction.
In other words, you can probably breathe easy about the debt ceiling, and the U.S.'s chances of defaulting. But that doesn't mean harmful new spending cuts aren't coming soon.