RSC in the News
House Republicans are starting to rally behind a strategy on the debt ceiling called "cut, cap and balance." This is the condition for an agreement to raise the $14.3 trillion debt ceiling that was recently laid out by House Republican Whip Kevin McCarthy of California.
"What this means is we want an iron clad cut in spending over the next five years; an enforceable cap on outlays with automatic sequestration if the caps aren't met; and a balanced-budget requirement," said Mr. McCarthy.
The strategy is also being pushed by conservatives on the House Republican Study Committee. According to sources there, RSC Chairman Jim Jordan of Ohio will unveil a plan in the days to come that will require a balanced-budget agreement plus a cap on spending that brings federal outlays down to "around 18% of GDP after 10 years." Several RSC members are still smarting over the fact that the spending cuts in the 2010 continuing resolution were much smaller than promised, and this has only emboldened conservatives to take a harder line on the debt ceiling.
That could be bad news for the White House and Treasury Secretary Tim Geithner, who continues to talk about "Armageddon" if the debt bill is not passed. The scare tactic doesn't appear to be working. This week Mr. Geithner sent a letter to congressional leaders once again urging "timely action to increase the debt limit in order to protect the full faith and credit of the United States and avoid catastrophic economic consequences for citizens." Rep. Todd Akin of Missouri echoed the sentiment of a large majority of his House Republican colleagues when he responded, "We just can't fold like we did on the CR, because the real financial crisis happens if we don't solve this debt problem."
In the Senate, meanwhile, debt ceiling talks have been stalled by Democratic demands for tax increases. Republicans want Democrats to take tax rate increases "off the table," as Jon Kyl (R., Ariz.) put it. Sen. Kyl said that even tax loophole closers shouldn't be part of the debt ceiling talks but should be done "in the context of reforming our Tax Code so we can use those increased revenues in order to reduce the tax rates so that our country can be more competitive."
The bottom line is that the two sides are still miles apart from agreement. "We understand this is our maximum point of leverage on the budget," says Mr. McCarthy. "I assure you, we aren't backing down." House Budget Committee Chairman Paul Ryan (R., Wisc.) said this week that he expects the debt standoff to last until "the last minute."
Online: Wall Street Journal