* White House has said it will veto bill
* House Republicans are mulling debt ceiling strategy
* Bill would allow U.S. Treasury to borrow more funds
By Rachelle Younglai
WASHINGTON, May 9 (Reuters) – U.S. House Republicans are
expected to pass a bill on Thursday that would require the Obama
administration to prioritize government debt payments and
retirement benefits if Congress fails to reach a deal to raise
the U.S. debt ceiling.
The legislation is not expected to go anywhere in the
Democratic-controlled Senate and the White House has said it
will veto the bill, but what is essentially a tactical maneuver
will allow the Republicans, who control the House, to argue they
have done their best to avoid a potential U.S. credit default.
By the end of next week, the Obama administration will no
longer be able to borrow money to fund government operations
because Congress has only agreed to extend the government’s
borrowing authority until May 19.
This will force the U.S. Treasury to start using its limited
accounting maneuvers to extend the debt limit, but such measures
are not permanent and analysts say they could be exhausted by
October.
The Republican bill would allow the U.S. Treasury to borrow
more funds to pay the interest and principal on government bonds
as well as retirement benefits.
“Financial markets ought to be confident that their Treasury
bonds are safe, regardless of what political storms are raging
in Washington,” said Republican Representative Tom McClintock of
California, who crafted the original version of the bill.
REPUBLICAN STRATEGY
House Republicans are looking for ways to deal with the debt
limit while staying true to House Speaker John Boehner’s rule
that any debt-cap increase be matched by budget cuts and
reforms.
The Republicans have been trying to force the administration
to slash government spending and reform Medicare and Social
Security benefits in return for an increase in the debt ceiling.
However, with no deal along those lines in sight, some
allies of chief Republican tax writer Dave Camp have floated the
idea of linking a debt-limit increase to a revamp of the tax
code and lower tax rates.
This would allow lawmakers to skirt the politically painful
decisions to cut Medicare and Social Security.
However, it is unclear mainstream party supporters, much
less the conservative faction of the Republican Party, will go
along with this.
“It wouldn’t be enough,” said Kevin Brady, a senior
Republican from Texas who is on Camp’s tax writing committee.
He said reform of the Social Security and Medicare benefits
programs would still be required, a position echoed by Kansas
Representative Tim Huelskamp.
Camp has been working for more than a year to draft an
overhaul of the entire tax code and has vowed repeatedly to move
legislation out of his Ways and Means Committee this year.
House Republican are due to hold a meeting next Wednesday to
discuss the various options.
