Offering yet another alternative to the debt ceiling problem, Republican presidential hopeful Rep. Michele Bachmann, R-Minn., and two Tea Party-backed Republicans introduced a measure Wednesday that would prioritize federal spending in the event the U.S. reaches its $14.3 trillion debt limit. Paying military salaries and principal and interest held on the debt would be top priority to avoid a default, according to the proposal.
At a press conference this morning, Bachmann reiterated that she would not vote to increase the debt ceiling, despite warnings from Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke, who say failure to do so would be catastrophic and cause massive job losses. She doesn’t believe the U.S. will default if Congress does not raise the debt ceiling by $2.5 trillion — the amount President Obama has requested — before August 2. “That is simply not true,” Bachmann said about the legislation, called the “PROMISES Act.”
Earlier this week, House Speaker John Boehner, R-Ohio., said the debt ceiling must be raised. The trio of conservatives suggested that Boehner not heed the Obama Administration’s warnings. “He is getting dishonest advice,” said Rep. Louis Gohmert of Texas. “I will encourage the Speaker not to believe the President anymore, because the fact is if he does his homework he will find there is such a thing as the Social Security Trust Fund. [The fund] will be able to pay seniors their checks even if Congress does nothing. I would encourage our Speaker to quit believing the President when he uses these scare tactics.”
For the first time on Tuesday, Obama told CBS News that he “couldn’t guarantee” retirees would receive their Social Security checks on August 3, if Democrats and Republicans don’t come to an agreement on reducing the deficit in the next three weeks.
“We don’t believe that for a moment,” Bachmann said. “There are sufficient funds in the Social Security Trust Fund right now to make sure that they get checks.”
Stark Comparison to Greece
Rep. Steve King, R-Iowa., compared the U.S. situation to the crisis in Greece, which is on the verge of debt default. “If we don’t get our spending under control, we will be Greece and there is no one to bail us out,” King said. “The credit rating we have – we are trying to preserve it with this bill.”
King’s remarks came hours before President Obama and top congressional leaders were scheduled to meet; today will be the fourth consecutive day of meetings to try to hammer out a deficit reduction deal. Both parties remain miles apart; prospects for a bipartisan deal look gloomier than ever. The main stumbling blocks are taxes and entitlement reforms. The group will meet at 4 p.m. today.
The White House has insisted it will continue to pursue a “big deal,” including a $4 trillion deficit reduction package over 10 years, while Republicans are pressing for a smaller $2.4 trillion package that does not include tax revenues.
Yesterday, Senate Minority Leader Mitch McConnell threw a monkey wrench into the debt ceiling talks by offering up his own “back up” plan should leaders not be able to agree on a deficit package. Under his plan, the President would be to raise the debt ceiling by $2.4 trillion in three increments through the 2012 election. McConnell said he has “become increasingly pessimistic that we cannot reach an agreement” with the President.
The administration welcomed the proposal, but White House press secretary Jay Carney said, “It is not the preferred option.” Carney described the meeting as “constructive” on Wednesday. “It allowed participants to exchange different views about how we can build on the cuts we can agree on and how we can get from small to medium to large,” he said at a press briefing. “That process continues today.”
Senate conservatives, meanwhile, who insist a balanced budget amendment be passed before agreeing to raise the debt ceiling, are withholding support from McConnell’s plan. Senators Pat Toomey of Pennsylvania and Rand Paul of Kentucky declined to endorse the plan, citing efforts to continue work on their “cut, cap and balance” plan.
It’s unclear if McConnell’s proposal would pass the House, but House Majority Leader Eric Cantor, R-Va., said he didn’t think any plan to raise the debt ceiling would pass the chamber. Conservatives quickly assailed the alternative as a sell-out to the White House and said they would oppose it. “That’s the fox in the hen house,” King said. “I’m really apprehensive about such a proposal.”
More on the debt limit debate from The Fiscal Times:
McConnell Turns Debt Ceiling into a Political Football
How Obama’s Social Security Changes Will Hurt You
Mr. President: America Is Paying Attention to the Debt Ceiling