GOP agrees to raise debt ceiling

Deal requires Congress to pass budget in 3 months

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WASHINGTON -- Backing down from their hard-line stance, House Republicans said Friday that they would agree to lift the federal government's statutory borrowing limit for three months, with a requirement that both chambers of Congress pass a budget in that time to clear the way for negotiations on long-term deficit reduction.

The new proposal, which came out of closed-door party negotiations at a retreat in Williamsburg, Va., seemed to significantly reduce the threat of a default by the federal government in coming weeks. White House press secretary Jay Carney said he was encouraged by the offer; Senate Democrats, while bristling at the demand for a budget, were also reassured and viewed it as a de-escalation of the debt fight.

The new plan would raise the debt limit, which currently stands at $16.4 trillion, for a few months in exchange for a promise that the Democratic-controlled Senate will not miss the traditional April 15 deadline to pass its budget -- a habit that has irked conservatives.

The change in tack represented a retreat for House Republicans, who were increasingly isolated in their refusal to lift the debt ceiling. Speaker John A. Boehner, R-Ohio, had previously said he would raise it only if it were paired with immediate spending cuts of equivalent value. The new strategy is designed to start a more orderly negotiation with President Barack Obama and Senate Democrats on ways to shrink the $1 trillion deficit.

To add muscle to their bid to bring Senate Democrats to the table, House Republicans will include a provision in the debt-ceiling legislation that says lawmakers will not be paid if they fail to pass a budget blueprint, though questions have been raised about whether that provision is constitutional.

That "no budget, no pay" provision offered Republicans a face-saving way out of a corner they had painted themselves into -- and an effort to shift blame for any default onto the Senate if it balks. The House Republicans' campaign arm quickly moved from taunting Democrats about raising the government's borrowing limit to demanding that they sacrifice their paychecks if they fail to pass a budget.

"The Democratic-controlled Senate has failed to pass a budget for four years. That is a shameful run that needs to end, this year," Mr. Boehner said in a statement from Williamsburg. "We are going to pursue strategies that will obligate the Senate to finally join the House in confronting the government's spending problem."

House Democrats met the deal with scorn, indicating that they would inflict maximum political pain by making Republicans carry it to passage. But other Democrats were more sanguine. The president had said he would not sign a short-term debt ceiling increase, but a senior administration official said that as long as there were no surprises, the White House would likely accept the House's offer. Most important, the official said, Republicans had broken from the "Boehner rule" imposed in 2011: Any debt-ceiling increase was to include a dollar-for-dollar spending reduction.

The decision represents a victory -- at least for now -- for Mr. Obama, who has said for months that he will not negotiate budget cuts under the threat of a debt default. By punting that threat into the spring, budget negotiations instead will center on two earlier points of leverage: March 1, when $1 trillion in across-the-board military and domestic cuts are set to begin, and March 27, when a stopgap law financing the government will expire.

Reordering the sequences of those hurdles was central to the delicate internal GOP deliberations that resulted in the new plan. In the days leading to the Williamsburg retreat, House Budget Committee chairman Paul Ryan , R-Wis., the former vice-presidential nominee, had been meeting with the leader and three past chairmen of the conservative House Republican Study Committee to discuss a way through the debt-ceiling morass. Those conversations led into Thursday morning, when Mr. Boehner and House Majority Leader Eric Cantor, R-Va., opened the retreat by going through the timeline for the coming budget fights, said aides in attendance.

They turned over the floor to House Ways and Means chairman Dave Camp, R-Mich., who described the economic disaster that could be wrought by a government default. He also talked through the notion some Republicans held that the Treasury could manage a debt-ceiling breach by channeling the daily in-flow of tax dollars to the most pressing needs, paying government creditors, sending out Social Security checks and financing the military. His message was that it would not work, aides said.

Then Mr. Ryan stood to discuss options he had developed with the House conservative leaders. They could do a longer-term debt-ceiling extension with specific demands, such as converting Medicare to a voucherlike program. Or they could reorder the budget hurdles with a three-month punt and add the "no budget, no pay" provision.

House Majority Whip Kevin McCarthy R-Calif., met with freshmen early Friday to make sure they were on board. Then the top four leaders sealed the agreement midmorning.

Mr. Obama will unveil his own 10-year budget plan in February, laying out his tax and spending plans for his second term.

But Senate Democrats, for the past four years, have refused to move a budget blueprint to the Senate floor, in violation of the Budget Act of 1974, which laid out new rules for controlling deficits.


The Los Angeles Times contributed.


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