–Analysts Say Republican Leaders Strike More Conciliatory Tone
–Experts Also Say That GOP Does Not Plan To Put Full Agenda On Bill
–GOP Leaders Boehner and McConnell Are Veterans of Past Debt Hikes

By John Shaw

WASHINGTON (MNI) – This year’s fight to increase the statutory debt
ceiling is likely to be brutish, nasty and long.

But budget experts say that while the battle ahead is likely to be
hard fought and even fierce, it’s not likely to resemble the high-stakes
brinksmanship that took place in 1995 and 1996 between President Clinton
and the Republican leadership in Congress that included calls by some
House Republicans to impeach Treasury Secretary Robert Rubin for his
bold cash management moves.

While this year’s debt limit fight may be more contentious than the
recent norm, it is unlikely to spin out of control.

Experts see two very significant differences between the 1995-96
and the 2011 debt limit efforts.

First, unlike in 1995 when Republican leaders spoke openly of using
the possibility of a default as a political weapon, both House Speaker
John Boehner and Senate Minority Mitch McConnell have spoken about the
need to increase the debt ceiling in tough, but conciliatory terms.

Second, while Boehner and McConnell have said they will require
that any debt ceiling hike be coupled with spending cuts and budget
process changes, they have not threatened to place the largest and most
controversial parts of their legislative agenda on debt ceiling
legislation.

“So far, I think Boehner and McConnell have taken a pretty measured
approach to this. They know they have to raise the debt limit, but they
want to exact some price from the president for doing it. And they want
to make very sure that there will be plenty of Democratic votes to help
them pass the bill,” says Bill Frenzel, a former Republican congressman
and now a guest scholar at the Brookings Institution.

“I feel confident that we’ll get this debt ceiling thing resolved.
I hope it doesn’t take too long because we got to get work pretty soon
to the main event–trying to see if we can get some kind of compromise
to get our deficit under control. The longer we waste time on the debt
limit, the longer we take getting to the really important stuff,” he
added.

In terms of tone, Boehner spoke last week about boosting the debt
ceiling in a tough but also restrained way.

“The American people will not stand for such an increase unless it
is accompanied by meaningful action by the president and Congress to cut
spending and end the job-killing spending binge in Washington,” he said.

Boehner added, “While America cannot default on its debt, we also
cannot continue to borrow recklessly, dig ourselves deeper into this
hole, and mortgage the future of our children and grandchildren.”

Boehner’s current comments are in stark contrast to the rhetoric
surrounding the 1995 and 1996 fiscal debate. Then House Speaker Newt
Gingrich all but welcomed a default if it was required to force Clinton
to accept Republican fiscal goals.

“I don’t care what the price is. I don’t care if we have no
executive offices, no bonds for 60 days,” Gingrich told the Public
Securities Association in the fall of 1995 when asked about the debt
ceiling impasse.

“What we are saying to Clinton is: do not assume that we will
flinch, because it won’t work,” he said defiantly. Almost six months
later, congressional Republicans did flinch and passed a $600 billion
debt ceiling hike. The next debt ceiling vote was not needed until
August of 1997.

In terms of linking the debt hike to other issues, Republican
leaders in 1995 and 1996 initially placed their entire tax cut and
entitlement reform agenda on the debt ceiling bill which Clinton
eventually vetoed. This included major tax cuts and large savings from
Medicare, Medicaid and other entitlement programs.

In the fall of 1995, Senate Budget Committee Chairman Pete Domenici
told a joint hearing of the House and Senate Budget committees that it
would be better to risk default than give up the chance to pass a
balanced budget plan.

Frenzel notes that Boehner and McConnell were both members of
Congress during that fight and saw that Clinton shrewdly used the
government shutdown and the related debt limit fight to portray
Republicans as extremists–and to coast to an easy re-election in 1996.

He said that both Boehner and McConnell have signalled they will
require some significant concessions from President Obama on fiscal
policy before they push a debt hike bill through Congress, but have
given no indication that they will pack the bill with items that they
know Obama can’t accept.

Bob Bixby, executive director of the Concord Coalition, says that
Republican leaders understand the need to increase the debt ceiling, but
still are bracing for a protracted fight.

“The Republican leaders, Boehner and McConnell, know that default
is not an option and they need to pass the debt ceiling bill. But the
problem is, especially for Boehner, that the rank-and-file are pretty
rambunctious and see this vote as an opportunity to push budget policy
in another direction. There is no question the debt ceiling will be
increased, but it may be a more difficult than normal. But it probably
will not be as brutal as during the Gingrich era,” he said.

Bixby said there may be a number of short-term extensions as Obama
and congressional leaders negotiate “other issues that are not directly
related to the debt ceiling.”

Last week, Treasury secretary Tim Geithner sent a letter to
congressional leaders saying the debt ceiling needed to be increased as
early as March 31.

Last week, Treasury said the U.S. debt is at $13.95 trillion,
leaving a cushion of $335 billion below the $14.29 trillion debt
ceiling.

** Market News International Washington Bureau: (202) 371-2121 **

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