NEW YORK — The top Republican in Congress wants trillions of dollars in spending cuts as part of must-pass legislation allowing the federal government to continue borrowing to keep it operating and meeting obligations to investors. It's a new, ambitious marker in a battle over the budget that's expected to consume Congress for much of the summer.
House Speaker John Boehner also said that any legislation to raise the so-called debt limit beyond its current $14.3 trillion cap should be accompanied by spending cuts larger than the amount of the permitted increase in the debt.
The Ohio Republican made the comments in a speech Monday night to the Economic Club of New York. Boehner's comments come as investors and business groups have been seeking assurances that the GOP-controlled House will join with President Barack Obama and the Democratic-led Senate to enact the must-pass debt limit measure, which is needed to prevent a market-roiling, first-ever U.S. default on its obligations.
Treasury Secretary Timothy Geithner says a failure to increase the federal government's ability to borrow would have disastrous effects on the economy.
"It's true that allowing America to default would be irresponsible," Boehner said. "But it would be more irresponsible to raise the debt limit without simultaneously taking dramatic steps to reduce spending and to reform the budget process."
The government is headed toward a $1.6 trillion deficit this year requiring it to borrow more than $125 billion a month. It's unclear how much of a debt limit increase is coming, but it would take a record increase in the $2 trillion range to avoid a second vote before next year's elections. The most recent increase in the debt limit of $1.9 trillion was passed by a Democratic-controlled Congress early last year.
The debt measure's path through Congress promises to be extraordinarily difficult since the arrival of 87 House GOP freshmen — many elected with tea party backing last year — for whom the debt vote is politically treacherous. At the same time, Democrats controlling the Senate and the White House support revenue increases that are a non-starter with Republicans.
Boehner's remarks are notable since it's virtually impossible to produce spending cuts of that size without addressing major benefit programs like Medicare, food stamps and Medicaid. And they came less than a week after Majority Leader Eric Cantor, R-Va., and other top Republicans seemed to acknowledge that political reality would probably rule out such cuts before the 2012 presidential and congressional elections.
A GOP budget blueprint that passed the House last month calls for transforming Medicare from a program in which the government directly pays medical bills into a voucher-like system in which future beneficiaries — those presently 54 years old or younger — would receive subsidies for purchases of private insurance plans.
Dozens of protesters gathered outside the hotel where the event was being held.
"We're not talking about billions here. We should be talking about cuts in trillions," Boehner said. "These should be actual cuts, real reforms to these programs and not broad deficit targets that punt the tough questions to the future."
In fact, one of the options being considered by Republicans is to impose a hard cap on government spending that would be backed up with across-the-board spending cuts if the targets aren't met. The idea is firmly opposed by the White House, which prefers a mechanism that would incorporate automatic revenue increases as well.
"Tax hikes should be off the table," Boehner said.
Boehner called for "honest conversations" about the future of Medicare. He added that a failure to act could provoke a debt crisis that could require tougher cuts than anything now being contemplated.
"If we don't act boldly now, the markets will act for us very soon," Boehner said.
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