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Once More Unto the Budget Breach

Speaker John Boehner sparked a fiscal frenzy Tuesday, firing the opening salvo in what is sure to be an epic end-of-year fight over taxes, spending and debt.

Seeking to frame the coming lame-duck session, the Ohio Republican demanded that an expected year-end debt limit increase be offset with equal or greater spending cuts or reforms. It’s the same demand he made last year, dubbed the “Boehner Rule.”

“We shouldn’t dread the debt limit; we should welcome it,” Boehner said.

But the demand sparked a fervent backlash from Democrats and the White House, all but ensuring the government heads to the fiscal brink once again.

Boehner, speaking at the annual fiscal summit organized by the Peter G. Peterson Foundation, framed the coming fight as an opportunity.

“What I’m trying to do here is use the debt ceiling as an action-forcing event to force the process here to deliver more change than it would on its own,” he said.

Boehner, however, made it clear he doesn’t support raising taxes — a key demand of Democrats — leaving both sides at a stalemate.

The Speaker outlined his plans to vote before the elections on language preserving the 2001 and 2003 tax cuts, as well as affirming the party’s commitment to overhauling the tax code.

“If we do this right, we will never again have to deal with the uncertainty of
expiring tax rates,” he said. “We’ll have replaced the broken status quo with a tax code that maintains progressivity, taxes income once and creates a fairer, simpler code.”

Boehner also took aim at President Barack Obama, accusing him of losing his nerve to pursue a debt grand bargain without tax hikes last year after Senate Democrats balked.

“I hope the president will step up, bring his party’s Senate leaders along and work with us,” Boehner said. “Because if there’s one action-forcing event that trumps all the rest — even the debt limit — it’s presidential leadership.”

But before the Speaker even took the stage, Democrats, reacting to excerpts of his speech, accused Republicans of playing games with the full faith and credit of the government.

Treasury Secretary Timothy Geithner, another speaker at the summit, said it would be irresponsible to call into question the country’s creditworthiness.

“You can’t put it into doubt … or threaten to undermine that in service of a partisan political agenda,” he said. “Only Congress, of course, can act to raise the debt limit, and we hope they do that this time without the drama and the pain and the damage they caused the country last July.”

Last year’s debt limit crisis helped spark the first debt downgrade in history.

The White House would likely rather be talking about the president’s plans to spur growth instead of getting dragged back into another debt limit hostage crisis — especially with presumed Republican presidential nominee Mitt Romney ramping up his criticism Tuesday of the debt piled up by the president.

The White House and Democrats have made clear that they are prepared to talk to Republicans about a way forward on the fiscal cliff, but only when Republicans agree to compromise on taxes.

Senate Majority Leader Harry Reid (D-Nev.) ripped Boehner’s position and predicted that nothing much would happen before the November elections.

“Republicans can grandstand all they want. The fact is any agreement to avoid the fiscal cliff facing us at the end of this year must not gut programs that support the middle class like Medicare and Social Security and education. It must be balanced with policies that ask millionaires to help a little bit and do their fair share. … It’s pretty clear to me that the tea party direction of the Republican Party is driving them over a cliff.”

Republicans have refused to consider raising taxes on the wealthy as part of a compromise, they note, and Democrats aren’t about to cut Medicare and other programs unless the pain is shared.

White House Press Secretary Jay
Carney said the president will not participate in a repeat of last year’s brinkmanship. The prospect of a debt fight do-over “suggests to me that maybe somebody wants to test the proposition that you can’t get to zero in your approval rating,” he said. “I mean, Congress tried last year. It got to single digits. But perhaps they want to set a record. But the president’s not going to enable them in that cause.”

Instead, the administration intends to push hard for the latest iteration of the president’s jobs agenda — summoning Boehner and other Congressional leaders to the White House on Wednesday to discuss it.

Obama will try and pressure the GOP to back his plan to cut taxes for small businesses who hire new workers, as well as the other items on his agenda, such as allowing millions of homeowners to refinance their mortgages even if their homes are worth less than they owe.

Meanwhile, at an event in Iowa, Romney warned of “a prairie fire of debt,” blasting the president’s stimulus package and health care laws. “That fire could care less if you have a donkey or an elephant in your front lawn, it’s still coming for your house,” he said.

Boehner’s comments, while likely tailored to appeal to the most conservative elements of his Conference, were met with “lots of eye rolling,” according to a GOP aide.

“Although most folks believe that the Speaker wants to offset any debt ceiling increases with bigger cuts, we know he won’t use his political muscle to make that happen,” the aide said.

The aide noted that Members are skeptical because the $2 trillion savings claimed in July’s debt limit deal could still evaporate, noting that the Joint Committee on Deficit Reduction failed in its mission and Members on both sides of the aisle are trying to turn off the sequester.

Democrats, meanwhile, aren’t eager to rejoin talks with Boehner after the House reneged on the spending levels agreed to in the Budget Control Act.

“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,” said Sen. Charles Schumer (D-N.Y.), the party’s messaging chief. “The last thing the country needs is a rerun of last summer’s debacle that nearly brought down our economy.”

But for all the partisan bickering, there was bipartisan consensus on one fact: Democrats and Republicans believe the lame duck will see a temporary solution, rather than permanent fixes.

House Budget Chairman Paul Ryan (R-Wis.) and ranking member Chris Van Hollen (D-Md.), both summit speakers, agreed that the chances of reaching a large agreement by the end of the year are remote.

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