If Republicans listen to many of their new financial friends at banks, hedge funds, and other investment firms, they will do the “responsible thing” and vote to immediately raise the debt ceiling to whatever level Treasury Secretary Tim Geithner thinks appropriate. And then they will agree to big tax increases to balance the budget.
But House Speaker John Boehner told the Economic Club of New York last night that the House GOP will agree to neither. Tax hikes are off the table. And spending cuts “should be greater than the accompanying increase in debt authority the president is given.” (The only thing missing was Big John telling Senator Geary to personally put up the fee for the gaming license.)
Tough stuff that the audience didn’t much like. And a nice change of pace after Republicans listened to the bankers and backed off fledgling efforts earlier this year to let debt-burdened states declare bankruptcy. (Bad for Wall Street’s pension-fund clients.)
But not raising the debt ceiling at Geithner’s urging is not the same thing as defaulting on U.S. debt obligations, a separation that would be clearer if Congress passed Sen. Pat Toomey’s Full Faith and Credit Act bill, which would prioritize debt payments. And GOPers should think twice about listening to people afflicted with Clinton nostalgia — and high-priced tax attorneys to help them avoid the IRS. A good start to the second phase of the anti-spending spring offensive.
— James Pethokoukis is Money & Politics columnist at Reuters Breakingviews.