TOPICS > Politics

Setting Debt Limits?

January 22, 1996 at 12:00 AM EDT

MARGARET WARNER: The impasse over the best road to a balanced budget continues, but it is once again complicated by a spat over the national debt limit. We hear first from a Democrat, Senate Minority Leader Tom Daschle of South Dakota. Welcome, Senator.

SEN. THOMAS DASCHLE, Senate Minority Leader: (Capitol Hill) Thank you, Margaret.

MARGARET WARNER: I gather you were in these meetings this morning, rather this afternoon up on Capitol Hill when Treasury Sec. Rubin briefed you about the latest developments on the national debt limit. What can you tell us about what he told you?

SEN. THOMAS DASCHLE: Margaret, what he said was that he’s running out of options, that there really isn’t much latitude left. He doesn’t have any flexibility. By the end of February, we will have to have dealt with this issue. We can’t avoid it any longer. We’ve got to deal with it. I think it’s important to deal with it, and the Secretary urged us to do it as soon as possible.

MARGARET WARNER: And do you think the threat is for real?

SEN. THOMAS DASCHLE: Well, you have to take the words of the Majority Leader in the House for real and others who have voiced a similar position. Obviously, it’s an extraordinarily irresponsible position to take, but I take it as a real threat.

MARGARET WARNER: What I meant by this was Sec. Rubin last November was saying that there was also a threat, a possibility of default, and then he did find some sort of creative accounting ways to work around it. Did you all ask him about that, and did he say that absolutely he’s out of all those options?

SEN. THOMAS DASCHLE: Well, that’s exactly what the secretary told us this afternoon. He said that indeed this is real, that he has run out of options, that there really is no other way with which to deal with the situation. He told us last Fall that while technically we were in a very dangerous and precarious position, he had latitude last Fall that he could use to a certain extent for a period of time. That’s no longer possible. All of those options, all of those tools, all of that flexibility has now expired, and we’ve got to make a very difficult and important decision here in the Congress.

MARGARET WARNER: And now as you did say earlier that House Majority Leader Dick Armey said that, in fact, House Republicans would not agree to a clean debt limit extension but wanted to add a number of conditions and restrictions. Did Sec. Rubin say whether the President would be willing to agree to any of those in return for a debt limit increase?

SEN. THOMAS DASCHLE: Well, of course, we don’t know what the conditions are, but, in my view, the very threat of, of shutting the government down, of threatening the full faith and credit of this economy, of this government, simply to have your way in whatever political agenda there may be is irresponsible, it’s wrong, and it’s extreme. That’s the kind of thing that gets us in trouble. It’s the problem we had all through the negotiations with regard to federal employees and whether or not we open or shut the government. Obviously, this is far more disconcerting, far more of a concern to us when you’re talking not only about the government, but about the entire economy.

MARGARET WARNER: And are you saying that you think the President should not agree, you know, some of the conditions suggested by Mr. Armey were, were, for instance, to shut down the Commerce Department, that was one he mentioned today. Another one was to restrict the Secretary of the Treasury in the future from doing the kind of creative accounting he did last time to get us to this point without default. I mean, if you just take those two conditions, are you saying the President should not accept anything like that?

SEN. THOMAS DASCHLE: Well, my advice to the President would be absolutely not. Of course, this is the choice the President is going to have to make, but shutting down the Commerce Department is an example of the extremism here that I don’t think has even support among Republicans here in the Senate. I think Sen. Dole is right. Enough is enough. No one understands shutting down the government. No one, I guarantee you, will understand putting the government and the country in default. That’s not the way we do business here.

MARGARET WARNER: Now, if the financial markets do respond to this by either raising interest rates or the market going down, do you think that in the public’s eye Republicans will, will carry all the blame, or do you think that Democrats in the White House might, might also come in for some blame?

SEN. THOMAS DASCHLE: I don’t know how the Democrats or the President could be held accountable or responsible when it’s the Republicans, especially those in the House, who are advocating this position. We’re not advocating it. We want to see a clean debt limit increase. We want to be able to deal with this in a responsible way. We believe that we ought to take it out of the context of budget negotiations and out of the context completely of politics. Let’s not play politics with the economy. Let’s not endanger the economy, the full faith and credit of this government simply because we can’t have our way. That isn’t the way you deal with it. You got to have compromise. You got to govern from the middle. You got to deal with both sides. That’s what we want to do.

MARGARET WARNER: All right. Let me get your thoughts now on where the budget negotiations stand. Yesterday Trent Lott, the Senate Majority Leader, said he considered the prospects quite doubtful now for getting any kind of balanced budget deal. Do you agree with him?

SEN. THOMAS DASCHLE: Well, Margaret, we’re really talking about two things. There is absolutely no reason why we couldn’t have a budget agreement. We’ve agreed in principle if you take the minimal amount of cuts proposed by either Democrats or Republicans, merge them together, we’ve agreed to $711 billion of deficit reduction, more than $100 billion more than you need to balance the budget. What we haven’t agreed to is how you pay for a huge tax cut that we just don’t think you can afford given the circumstances. We support a tax cut but we will not use Medicare, Medicaid, education, and the environment to pay for it, but we have agreed to a balanced budget. Seven years, using CBO numbers, there is no reason why Democrats and Republicans can’t agree to that much. Let’s bank it. Let’s achieve the victory we want, let’s get that agreement, and let’s go on then to more negotiating.

MARGARET WARNER: Do you think the President could move any more–any closer to the Republicans in this?

SEN. THOMAS DASCHLE: Well, as I said, we’ve already agreed that we’ve done all you need to to make the cuts in the programs that we care deeply about to balance the budget. That’s already done, but I would advise the President not to go any further in cutting Medicare and cutting Medicaid or education or the environment so deeply as the Republicans are proposing to get the tax cut that they want. We can get a tax cut without cutting Medicare and Medicaid like they’d proposed.

MARGARET WARNER: You’re aware, of course, that Sen. Dole has said that the President’s budget is essentially phoney. I don’t know that he used that adjective, but he said 90 percent of the cuts come in the last two years after the turn of the century. Is he right about that?

SEN. THOMAS DASCHLE: Well, he’s not right about that, and furthermore, I would say that our pattern in deficit reduction is almost identical to the Republican pattern. In fact, as you may know, the deficit under the Republican plan goes up for the next three years, goes up; it doesn’t go down. And so–and the reason for that is that they have to accommodate the huge tax cut that they want. So there is room in the middle. We can find a resolution to this. We ought to go back to work. Let’s not have any more breaks around here. Let’s go back to work. Let’s resolve this thing. Let’s agree. Let’s get this balanced budget part of it done, then we can go on to other issues relating to tax cuts and other things for which there isn’t an agreement yet.

MARGARET WARNER: The Republicans are saying that the other option, of course, is to simply have another temporary funding bill, and that they might set the amount at say 75 percent of–as in fact the government, part of the government is operating now. What would be the consequences of that?

SEN. THOMAS DASCHLE: I think the consequences of funding government at 75 percent would be devastating in some cases. The governmental agencies can deal with these circumstances in the first quarter, perhaps in the second quarter, but it becomes increasingly difficult and virtually impossible in the third and fourth quarters in some cases. You would have what is tantamount to a government shutdown before the end of the fiscal year in some areas of the government. I think that’s wrong. It’s what we all agreed was not working over the, the Christmas break. I would hope we wouldn’t get to that again this year.

MARGARET WARNER: Well, thank you, Senator. Thanks very much.


MARGARET WARNER: Now, a Republican view. It comes from House Majority Leader Dick Armey of Texas. Welcome Congressman.

REP. DICK ARMEY, House Majority Leader: Hi. How are you all?

MARGARET WARNER: Hi. Fine. I couldn’t see you, but now I can. Tell me your reaction to what Treasury Sec. Rubin has said. I gather he not only told the leadership today, the Democratic leadership, but he sent a letter to Speaker Gingrich saying the same thing. Do you think this threat’s for real?

REP. DICK ARMEY: Well, first of all, let me say that I just came out of a meeting with Speaker Gingrich. I was earlier in a meeting with Sen. Dole. Neither I nor the Senator, nor the Speaker have received any correspondence from the Secretary of the President. Now let me just tell you first of all, I have been here for 11 years. I have seen a lot of debt ceiling increases that have been run through the Democrat Congress in those 11 years. Never have I seen them run one through clean, without hanging something on it. One case they had a major crime bill; they’ve had tax increases; they’ve had budgets. The idea that you get a clean debt ceiling is a fiction that they made up only for their convenience of a moment. Secondly, we passed a debt ceiling increase to the President sometime ago. He vetoed it. Now, prior to that, this same Secretary Rubin talked to us and said, look, I got to have a debt ceiling, I got to have it now; if I don’t have it right away, we’re facing a default on the government’s obligation; there’s going to be a financial disaster. We sent him a debt ceiling; he didn’t like it; the President vetoed it; and for the last sixty days or so, Sec. Rubin’s got along just nicely by disinvesting the retirement programs of federal workers. Now if he’s run out of those options, if it’s in fact true that he has no more creative financing options, and if he and the President want a debt ceiling increase, this is a serious public policy matter, they ought to seriously communicate that to the majority who controls both the House and the Senate. But since they haven’t made any official request of either the Senate or the House, it’s hard for me to take them seriously, especially when I hear all the political rhetoric that still flows from people like Tom Daschle. It strikes me that they are, in fact, continuing to do a political process here. If they want a serious public policy initiative out of Congress, they must contact the leaders of Congress.

MARGARET WARNER: All right. Okay, Congressman, but, but Sec. Rubin says he has written to the Speaker and let’s say the Speaker received this letter tomorrow, and the Treasury Secretary says, absolutely, positively, I’m out of creative accounting options by the end of February, are the Republicans going to go ahead and still insist on attaching conditions to the debt limit bill?

REP. DICK ARMEY: Well, let me say first of all, given the Secretary’s poor track record here, his assessment is not reliable, he is the boy who cried “wolf” in this case. We, we have already determined that this is something that the President must make as a request to the leaders of Congress. The Secretary’s simply not reliable, given his past record here on this matter.

MARGARET WARNER: All right. Excuse me, Congressman.

REP. DICK ARMEY: If the President of the United States asks for an increase in the debt ceiling, he will get one. And I hope when he does so, he will choose to not veto it, as he did the last time.

MARGARET WARNER: All right. So what you’re saying is you want to have these representations come from the President, himself?

REP. DICK ARMEY: Well, again, what–this is probably something we would not feel so strongly about if the Secretary didn’t have such a bad track record of inaccurately representing what his needs were and what he could or could not live without from past experiences, beginning early in November.

MARGARET WARNER: All right. What if the President tells you that he refuses as his spokesman said today, that he would not accept any kind of extra restrictions or conditions?

REP. DICK ARMEY: Well, we would send the President a debt ceiling increase. He is not–it is not possible to get one through the House, i.e., as it were clean. You would have to attach something of some significance to get it through the House. I know that. The Speaker knows that. The President knows that. When it comes to the White House, the President would then have the option of signing it or not signing it. If the President did not sign that, then he would, of course, be the person that would put the nation in peril of some, of some insolvency or whatever would be the consequences.

MARGARET WARNER: But are you sure the public would see it that way? You just heard Sen. Daschle call your position irresponsible and extreme and said the Republicans were playing politics with the economy. I mean, are you ready to take the political risk?

REP. DICK ARMEY: I’m willing to bet that the American people are as tired of listening to Sen. Daschle’s political rhetoric as I am, and I’m not much concerned about it. Talk about the boy who cried “wolf,” they can’t open–he and his colleagues, people like Gephardt and Daschle–they can’t open their mouths without saying words like “irresponsible,” “extreme,” et cetera, and so forth. People are just bored with listening to ’em.

MARGARET WARNER: Well, now how do you explain–let me ask this a different way. How sure are you that the President would respond to this pressure? When you tried to do this with the government shutdown, he did respond and, in fact, the polls suggest the public blamed the Republicans.

REP. DICK ARMEY: Well, you know, the President has got to make up his mind. What is the story he’s going to tell? Are we in a state of near crisis because, in fact, the Secretary of the Treasury after the President’s first veto on the debt ceiling increase has exhausted all of the retirement reserves of federal employees available to him, in terms of his creative financing, and therefore must absolutely 100 percent have a debt ceiling increase or put the government into insolvency, if that’s going to be his story, then I would think he would be more than happy to sign any debt ceiling increase he got. Unless he were to think that signing a debt ceiling increase that allows some modicum of the success of the agenda that this Congress was trying to put forward is a more dire thing for him to have to live with than putting the country in insolvency, he’d have to weigh that.

MARGARET WARNER: All right. Let me ask you–

REP. DICK ARMEY: The President, again, he has to come to terms with some responsibility for his actions.

MARGARET WARNER: And let’s turn finally to prospects for a balanced budget deal. Do you agree with Sen. Lott, who said yesterday he considered the prospects for a balanced budget agreement now quite doubtful?

REP. DICK ARMEY: It appears right now that the President is so captured by the left wing of his party that he is not able to accept the necessary entitlement reforms, programmatic changes in welfare. Remember, he promised to end welfare as we know it, and he vetoed that, the kinds of, of reforms in welfare, Medicare, and Medicaid that everybody in this town has known for years must be done if you’re going to have a real balanced budget effort, he is not willing to break with the left wing of his party enough to sign such a package. Until he can break with the left wing of his party, get away from the liberals a little bit, I don’t think we’ll be able to reach a balanced budget agreement.

MARGARET WARNER: Okay. And what’s wrong with the suggestions made by the President and made by Sen. Daschle that there are enough cuts on the table in which both sides agree now if you were to give up the tax cut and just go with the spending savings that everyone agrees with, you could get a seven year balanced budget plan and then wait for after the election to, to refine it further?

REP. DICK ARMEY: Well, a few things that are wrong with it, first of all, I have–I sat through all those 50 torturous hours at the white house, along with Sen. Daschle Tonight, right now, on your show is the first time I heard anything about a $700 billion number that he just apparently created for tonight’s show, so there’s a fiction that attaches to these proclamations they’ve made. Secondly, you don’t have a balanced budget deal unless it, in fact, is real and will stick through the whole seven years. The President has put some options on the table. The cuts that he talks about don’t take effect until after he would leave office even if he got a second term.

MARGARET WARNER: Okay, Congressman.

REP. DICK ARMEY: So it’s not a real deal, and we’re not going to take a real deal–

MARGARET WARNER: Thanks very much.

REP. DICK ARMEY: –a non-real deal.

MARGARET WARNER: We’re going to have to leave it there, but thanks very much for being with us.