Why debt limit issue may drag on through Election 2012

House Speaker John Boehner’s call for trillions in federal spending cuts as a condition for increasing America's $14.3 trillion debt limit just raised the bar for budget talks between congressional leaders and the White House, set to resume Tuesday – a move likely to keep the debt limit issue running through the 2012 election.

Allowing the United States to default on its debt would be “irresponsible,” Speaker Boehner told the Wall Street financiers' Economic Club of New York on Monday. “But it would be more irresponsible," he said, "to raise the debt ceiling without simultaneously taking dramatic steps to reduce spending and reform the budget process.”

In laying down his marker, Boehner signals to the White House that Republicans will exact a high price to raise the debt ceiling, to be paid off in spending cuts, not tax increases. With Democrats rejecting cuts to Social Security and Medicare, there's little left that could deliver the trillions in cuts. One alternative is to pass short-term debt-limit deals, each accompanied by spending cuts, until Americans weigh in on the issue in 2012 elections. Another is that Congress adopts dramatic structural moves to overhaul the budget process such as passing a balanced budget amendment to the Constitution – a long process that also would be certain to run through the 2012 election.

“If you can get a balanced budget amendment out of the Senate, you redefine the 2012 election,” says Michael Franc, vice president for government studies at the Heritage Foundation. Most Americans favor a balanced budget amendment, but balk when faced with the specific cuts needed to achieve a budget in which expenditures equal revenues.

For Congress, the debt limit is the ultimate pressure point for a House facing a president of the opposite party. The US Treasury estimates that the US will breach that limit on May 16, but can use accounting devices to extend that deadline until Aug. 2.

It will be a must-pass bill, and rank-and-file Republican lawmakers – as well as outside conservative groups – aim to hang as much on it as they can, including measures to defund President Obama’s health-care reform, mandatory spending caps, or a constitutional balanced budget amendment.

Some tea party groups oppose any hike in the debt limit, period. In Washington on Monday, tea party leaders announced the opening day of “RINO hunting season” (Republicans in Name Only) and blasted Boehner for conceding too much in previous budget negotiations with the Obama White House.

“As the GOP primary season opens, if House freshmen and others elected by the tea party cave to Obama, we will find replacements for them,” said William Temple, chairman of the Tea Party Founding Fathers. “We will be judging on just one issue only: Did you vote for more debt?”

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