Conservative groups want debt limit, spending fights separate

The Club for Growth and Heritage Action, two conservative advocacy groups, want congressional Republicans to keep fights over raising the debt ceiling and funding the government separate this autumn in order to increase leverage on their policy agenda.

“Every day of the week and twice on Sundays, it’s preferable to have the debt ceiling as part of a separate package,” said Andrew Roth, Club for Growth’s vice president for government affairs.

{mosads}If the debt ceiling debate gets rolled up with the funding debate, it could get subsumed in a “Christmas tree” spending package that might be released just 24 to 48 hours before a vote.

Congressional Republicans are debating whether to combine the two issues, as has been done at times in the past, but have not yet committed to a strategy.  

It’s unclear precisely when the debt ceiling will need to be hiked.

The Treasury Department has been taking “extraordinary measures” to keep the U.S. from defaulting since March 15, the date to which Congress had approved an earlier hike.

Those measures are scheduled to be exhausted sometime in the fall, at which point the U.S. would default on its debt without a new vote by Congress.

Separately, Congress faces a Sept. 30 deadline to approve a new bill funding the government.

When asked whether the debt ceiling would be paired with the spending fight, Senate Budget Committee Chairman Mike Enzi (R-Wyo.) responded, “Hard to say,” but he noted that “there are a number of people that have some things they may want to tie to budget reform.”

Club for Growth has a “buffet” of issues it’d like to attach to a debt ceiling bill that would grow with the size of the hike.

Among them: passing the Regulations from the Executive in Need of Scrutiny (REINS) Act, which would require congressional approval for new regulations, restricting food stamps through block grants by making changes to the earned income tax credit, or reforming entitlement spending. 

All of the proposals, the Club argues, would involve reducing government spending and boosting the economy, something conservatives have long sought to do when debating debt ceiling hikes.

Club for Growth and Heritage Action fret they would lose influence if the debt hike becomes part of a larger bill that funds the government.

“When we’ve seen these issues combined, it’s actually led to worse policy,” said Heritage Action Vice President Dan Holler. 

Republicans face a variety of new challenges to raising the debt ceiling, however.

This will be the first hike for President Trump, and the first time since Republicans took control of the House that they will be working with a Republican president on raising the nation’s debt limit.

That complicates matters for the GOP, which during former President Barack Obama’s tenure sought to use the debt hike as leverage to win concessions from Democrats on spending cuts.

Trump has ruled out changes to Medicare and Social Security, and Treasury Secretary Steve Mnuchin has promised a drama-free debt hike.

“Honoring the full faith and credit of our outstanding debt is a critical commitment,” Mnuchin said in March.  

Democrats have largely insisted that they want a “clean lift” for the debt ceiling, meaning a plan that raises the ceiling and includes no other provisions.

With Trump in the White House and Republicans controlling both chambers of Congress, Democrats are confident they would not be blamed for a fiscal crisis. In fact, several Democratic congressional aides refused to rule out the possibility of trying to extract political concessions of their own.

With conservative groups pushing for the two issues to remain separate, House Republicans will have to decide if they want to push for a clean lift with the help of Democrats, or attach policy riders to keep conservative Freedom Caucus members on board.

“It’s politically hard for the Republicans to pass a clean debt ceiling lift,” a Democratic Senate aide said.

It is unclear if either side can stomach the repercussions of breaching the fiscal limit, an event some economists warn could trigger another financial crisis.

The Government Accountability Office calculated that the 2011 debt ceiling battle, which led S&P to downgrade the U.S. from its top Triple-A credit rating, cost the government $1.3 billion in higher borrowing costs.

“Republicans have been pretty clear typically that they’re not willing to entertain going over the fiscal cliff,” Holler assured. But admitting that unwillingness amounted to “pre-emptively blinking” and handing power to the Democrats. 

One possible advantage to tying the debt ceiling to the spending bill for Republicans is the possibility that they could then use special budgetary rules to avoid a filibuster.

That would allow the combined bill to get to Trump’s desk with just Republican votes, taking leverage away from Senate Democrats.

“Under the Congressional Budget Acts, one of the three types of reconciliation legislations allowed is a budget change, so if Republicans are able to agree on a resolution for budget 2018, they can put the debt ceiling increase in without being filibustered,” said Richard Kogan, a senior fellow at the Center on Budget and Policy Priorities and former House Budget Committee and Office of Management and Budget staffer.