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Republicans Say Boehner Vows to Avert Federal Default Boehner Pledges to Avoid Default, Republicans Say
(about 13 hours later)
WASHINGTON — With a budget deal still elusive and a deadline approaching on raising the debt ceiling, Speaker John A. Boehner has told colleagues that he is determined to prevent a federal default and is willing to pass a measure through a combination of Republican and Democratic votes, according to multiple House Republicans. WASHINGTON — Speaker John A. Boehner has privately told Republican lawmakers anxious about fallout from the government shutdown that he would not allow a potentially more crippling federal default as the atmosphere on Capitol Hill turned increasingly tense on Thursday.
One lawmaker, who spoke on the condition of anonymity, said Mr. Boehner had indicated he would be willing to violate the so-called Hastert Rule if necessary to pass a debt-limit increase. The informal rule refers to a policy of not bringing to the floor any measure that does not have a majority of Republican votes. Mr. Boehner’s comments, recounted by multiple lawmakers, that he would use a combination of Republican and Democratic votes to increase the federal debt limit if necessary appeared aimed at reassuring his colleagues — and nervous financial markets — that he did not intend to let the economic crisis spiral further out of control.
A spokesman for Mr. Boehner pushed back on the idea that the speaker would try to pass a debt-limit increase mainly with Democratic votes, but acknowledged that the speaker understood the need to head off a default. They came even though he has so far refused to allow a vote on a Senate budget measure to end the shutdown that many believe could pass with bipartisan backing. They also reflect Mr. Boehner’s view that a default would have widespread and long-term economic consequences while the shutdown, though disruptive, had more limited impact.
“The speaker always, always prefers to pass legislation with a strong Republican majority,” said Michael Steel, a spokesman for Mr. Boehner. With the mood in Congress already unsettled by the bitter sparring over the fiscal standoff, the Capitol was shaken anew Thursday afternoon when a high-speed chase beginning near the White House ended near the Senate office complex with Capitol Police shooting the driver to death.
The sound of gunfire outside the Capitol forced at least five senators in the vicinity to take cover on their stomachs and led to a temporary lockdown of members of Congress and their staffs. The House and Senate adjourned for the day shortly after the incident as the shutdown extended into a third day.
Along with Senator Mitch McConnell of Kentucky, the Senate Republican leader, Mr. Boehner has long dismissed the idea that Congress would not act to prevent a damaging default, and President Obama on Thursday called a default “the height of irresponsibility.” But the failure of the House and Senate to reach a deal ahead of the shutdown has raised questions of whether Republicans could be persuaded to join in raising the debt limit before the Treasury Department runs out of money about the middle of October.
His comments were read by members of both parties as renewing his determination on the default and came as the Treasury warned that an impasse over raising the debt limit might prove catastrophic and potentially result “in a financial crisis and recession that could echo the events of 2008 or worse.”
Lawmakers said that in recent days, Mr. Boehner, who is under fierce attack from Democrats over his handling of the shutdown, has made clear that he is willing to use a combination of Republican and Democratic votes on the debt limit if need be. Representative Leonard Lance of New Jersey, one of the moderate Republicans who met privately with Mr. Boehner on Wednesday, would not provide details of the meeting, but said, “The speaker of the House does not want to default on the debt on the United States, and I believe he believes in Congress as an institution, and I certainly believe he is working for the best interests of the American people.”
One lawmaker, who spoke on the condition of anonymity, said Mr. Boehner suggested he would be willing to violate the so-called Hastert Rule to pass a debt-limit increase. The informal rule refers to a policy of not bringing to the floor any measure that does not have a majority of Republican votes.
A spokesman for Mr. Boehner pushed back on the idea that the speaker would try to pass a debt-limit increase mainly with Democratic votes. “The speaker always, always prefers to pass legislation with a strong Republican majority,” said Michael Steel, a spokesman for Mr. Boehner.
But Mr. Steel acknowledged that Mr. Boehner, who has long and deep ties to the business community, understood the need to head off a default.
“The speaker has always been clear that a default would be disastrous for our economy,” Mr. Steel said. “He’s also been clear that a ‘clean’ debt hike cannot pass the House. That’s why the president and Senate Democrats should drop their ‘no negotiations’ stance, and work with us on a plan to raise the debt limit in a responsible way, with spending cuts and reforms to get our economy moving again and create jobs.”“The speaker has always been clear that a default would be disastrous for our economy,” Mr. Steel said. “He’s also been clear that a ‘clean’ debt hike cannot pass the House. That’s why the president and Senate Democrats should drop their ‘no negotiations’ stance, and work with us on a plan to raise the debt limit in a responsible way, with spending cuts and reforms to get our economy moving again and create jobs.”
It is conceivable that Mr. Boehner could pass a debt-limit increase with a slim majority of Republican votes, and Democrats making up the difference, as he has in the past on budget measures. In meetings with Republican lawmakers, the speaker appeared to be offering reassurances to members worried about the government shutdown that he would not allow a default to take place. It is conceivable that Mr. Boehner could pass a debt-limit increase with a slim majority of Republican votes, with Democrats making up the difference, as he has in the past on budget measures. But moving in that direction poses risks of a threat to Mr. Boehner’s leadership position from a watchful conservative bloc, which has warned that his post could be on the line if he goes against the legislative position of large numbers of the rank and file.
Other Republicans also said Thursday that they got the sense that Mr. Boehner would do whatever was necessary to ensure that the country did not default on its debt. Representative John C. Fleming, Republican of Louisiana and one of his conference’s more conservative members, said that he doubted Mr. Boehner would be able to pass any bill — with or without Democratic support — that did not extract some significant concessions from Mr. Obama and Senate Democrats.
Representative Michael G. Fitzpatrick, Republican of Pennsylvania, who was one of just 22 House Republicans this year who helped Mr. Boehner pass three crucial bills — to avert a fiscal showdown, to provide relief for the victims of Hurricane Sandy, and to pass the Violence Against Women Act — with a majority of Democratic support, said he expected that he may be asked to do so again. “I just don’t think there’d be hardly any Republicans in support of raising the debt ceiling without cuts to spending, changes to Obamacare, and perhaps other issues,” Mr. Fleming said. He added that he thought House Republicans would demand at least some sort of delay to the president’s signature health care law, as well as require that every dollar increase in the debt ceiling be matched by a dollar increase in spending cuts.
At the same time, growing numbers of House Republicans have expressed frustration at those insisting on changes to the health law when Mr. Obama has made clear he will not accept them. Their unhappiness, the furor caused by the shutdown and the desire to avoid default could help protect Mr. Boehner.
Representative James Lankford, Republican of Oklahoma and chairman of the Republican Policy Committee, said he did not think House Republicans had the “energy” to deal with a debt default.
“The speaker’s been over and over on that on the debt ceiling, that there’s no intention for default,” he said. “That’s been public, private, everywhere he’s had an opportunity.”
Democrats saw the disclosure of Mr. Boehner’s private comments as a possible sign of progress.
“Even coming close to the edge of default is very dangerous, and putting this issue to rest significantly ahead of the default date would allow everyone in the country to breathe a huge sigh of relief,” said Senator Charles E. Schumer of New York, the No. 3 Democrat in the Senate.
A Treasury Department report released Thursday said the debt-limit impasse could cause credit markets to freeze, the dollar to plummet and interest rates to rise precipitously.
After its release, Mr. Obama reiterated administration warnings about the potential economic consequences of not increasing the debt limit. “As reckless as a government shutdown is, as many people as are being hurt by a government shutdown, an economic shutdown that results from default would be dramatically worse,” Mr. Obama said Thursday, speaking to construction workers at M. Luis Construction in Rockville, Md., a suburb north of Washington.
W. James McNerney Jr., chief executive of Boeing, and also the chairman of the Business Roundtable, a corporate association, and of the White House export council, said in an interview on Thursday that for corporate America, the standoff over the government shutdown “drives an even deeper concern about the debt limit.”
"Moderate voices in the business community and elsewhere do not seem to be making much of an impact — encouraging the kind of cooperation among our political leaders that we need to solve this problem. It’s frustrating,” he said.
Representative Michael G. Fitzpatrick, Republican of Pennsylvania, one of just 22 House Republicans this year who helped Mr. Boehner pass, with a majority of Democratic support, three crucial bills — to avert a fiscal showdown, to provide relief for the victims of Hurricane Sandy, and to pass the Violence Against Women Act — said he expected he may be asked to do so again.
“Hurricane Sandy, the fiscal cliff, all of the big votes require reasonable Republicans and Democrats to come together in order to pass it and get it to the president’s desk,” he said. “This will be no different.”“Hurricane Sandy, the fiscal cliff, all of the big votes require reasonable Republicans and Democrats to come together in order to pass it and get it to the president’s desk,” he said. “This will be no different.”
And, Mr. Fitzpatrick added, “I’ve been there in the past, and I’m prepared to be there again.”

Jackie Calmes and Jonathan Weisman contributed reporting.

Representative Leonard Lance of New Jersey, one of the moderate Republicans who met privately with Mr. Boehner on Wednesday, would not provide details of the meeting, but said, “The speaker of the House does not want to default on the debt on the United States, and I believe he believes in Congress as an institution, and I certainly believe he is working for the best interests of the American people.”
Passing a measure with a majority of Democratic votes could cause trouble for Mr. Boehner from his right flank. He has so far refused to bring to the floor a measure that could halt the federal government shutdown but would require significant support from Democrats.
But the consequences of a default would be much more severe.
A Treasury Department report released on Thursday said the debt-limit impasse could cause credit markets to freeze, the dollar to plummet and interest rates to rise precipitously. A default might prove catastrophic, the report said, and could potentially result “in a financial crisis and recession that could echo the events of 2008 or worse.”
The administration has made increasingly strong public warnings about the potential economic consequences of not increasing the debt limit.
“As reckless as a government shutdown is, as many people as are being hurt by a government shutdown, an economic shutdown that results from default would be dramatically worse,” Mr. Obama said on Thursday, speaking to construction workers at M. Luis Construction in Rockville, Md., a suburb north of Washington.
He said that a default would be “the height of irresponsibility,” adding that “there will be no negotiations over this.”
“The United States is the center of the world economy,” Mr. Obama said, “so if we screw up, everybody gets screwed up — the whole world will have problems.”
Many market participants interpret the White House’s public statements as an effort to get Wall Street to pay attention, even to provoke a market reaction that might spur Congress to act.
With the shutdown continuing and concerns about the debt ceiling growing, stocks slid on Thursday morning, with the Dow Jones industrial average down about 1 percent.
“As we saw two years ago, prolonged uncertainty over whether our nation will pay its bills in full and on time hurts our economy,” Treasury Secretary Jacob J. Lew said in a statement urging lawmakers to act. “Postponing a debt ceiling increase to the very last minute is exactly what our economy does not need — a self-inflicted wound harming families and businesses.”
The Treasury report shows that the Congressional debt-limit standoff in 2011 hurt consumer confidence, small-business confidence, household wealth and the stock market, with ramifications for lending and the economic recovery.
“A precise estimate of the effects is impossible,” the report says, “and the current situation is different than that of late 2011, yet economic theory and empirical evidence is clear about the direction of the effect: a large, adverse, and persistent financial shock like the one that began in late 2011 would result in a slower economy with less hiring and a higher unemployment rate than would otherwise be the case.”
Reports from a variety of economists and investment banks have come to the same conclusion. The government’s running out of money would be unprecedented, and thus the fallout remains unknowable. But there is the potential for a market calamity that could have global ramifications.
“The government shutdown is bad enough, but failure to raise the debt ceiling would be far worse,” Christine Lagarde, the managing director of the International Monetary Fund, said in a speech on Thursday morning. “It is mission-critical that this be resolved as soon as possible.”
Economic officials have privately indicated that they are worried Washington’s repeated flirtations with budgetary and financial crises have inured the markets to the real possibility of missed or delayed payments, or even default. By mid-October, the Treasury expects to have only $30 billion in cash on hand, meaning that on any given day it might have too little money to pay all the government’s bills.
The Dow Jones industrial average is about 1 percent higher than it was a month ago, and up about 15 percent this year. But the stock market has slid for the past two weeks. One-month Treasury yields have jumped to their highest level in nearly a year.
Right now, Democrats and Republicans remain at loggerheads over financing the federal government. Some Republicans have suggested that a broader bargain, including changes to entitlement programs, might be one path forward. But the White House has insisted that Republicans not include the debt ceiling in any negotiations.
Nearly 190 Democrats, including all members of the party’s House leadership team, have signed a letter circulated by Representative Peter Welch of Vermont supporting a “clean” debt-ceiling extension.
Republicans “view the health care bill as an existential threat to the country, and they are willing to use all tactics, including blowing up the economy, to get rid of Obamacare,” Mr. Welch said in an interview. “If shutdown and default become legitimate tactics, any Congress in the future could use those tactics to get their way.”
Wall Street “should be concerned,” President Obama told CNBC on Wednesday. “When you have a situation in which a faction is willing to potentially default on U.S. government obligations, then we’re in trouble.”
He added that it was “important” for Wall Street “to recognize that this is going to have a profound impact on our economy and their bottom lines, their employees and their shareholders.”