NEW YORK (CNNMoney) – House Speaker John Boehner warned Tuesday that he won’t permit another increase in the debt ceiling without a larger amount of spending cuts and reforms approved in tandem.
“When the time comes, I will again insist on my simple principle of cuts and reforms greater than the debt limit increase. This is the only avenue I see … to force the elected leadership of this country to solve our structural fiscal imbalance,” Boehner said at a fiscal summit sponsored by the Peter G. Peterson Foundation, according to prepared remarks.
In other words, welcome to deja vu all over again.
Boehner issued a similar warning at this time last year. The end result was a confidence-shaking showdown over the summer that resulted in the Budget Control Act, which calls for $2.1 trillion in spending cuts.
It also sparked the first-ever downgrade of the U.S. credit rating by Standard & Poor’s, which cited political brinksmanship as the chief cause.
Boehner said Tuesday “we shouldn’t dread the debt limit” because it’s an “action-forcing event.”
“Yes, allowing America to default would be irresponsible,” he said. “But it would be more irresponsible to raise the debt ceiling without taking dramatic steps to reduce spending and reform the budget process.”
At the same time, Boehner seemed to signal that the debt ceiling would be raised, but that it might need to be done incrementally.
“If … we have to do a series of stop-gap measures, so be it — but that’s not the ideal,” he said.
Treasury Secretary Tim Geithner said Tuesday at the fiscal summit that he estimates the country will likely hit its $16.394 trillion borrowing limit sometime before the end of year.
But, Geithner added, the Treasury Department can use so-called extraordinary measures to keep the debt from breaching the ceiling until early 2013. Such steps include suspending contributions to federal pension plans.
Employing such measures may separate the debt ceiling debate from the tsunami of budget decisions lawmakers must make by year’s end. That’s when the so-called fiscal cliff — $7 trillion worth of expiring tax cuts and spending policies that could undermine the economic recovery if implemented all at once.
At the same time, the debt ceiling debate likely won’t be entirely separate. Lawmakers may choose to temporarily extend some tax cuts and postpone some spending cuts, thereby pushing off the real debate until 2013.
If Congress fails to raise the debt ceiling and Treasury exhausts its extraordinary measures, the country will no longer be able to borrow and hence will not be able to pay its bills in full.
Geithner made it clear Tuesday, much as he did repeatedly last year, that creating any doubt that the United States will honor its obligations is a violation of a fundamental commitment.
“You can’t put it into doubt … in the service of any political agenda,” he said.
He added that he hopes lawmakers raise the debt ceiling “without the pain and drama they caused last time.”
Steny Hoyer, a leading House Democrat, echoed those sentiments in comments he made to CNN.
“The debt limit should not be a political issue. Mr. Boehner knows it shouldn’t be a political issue … We’ve incurred the debts. We need to pay the debts,” Hoyer said.
On the GOP side in the Senate, Sen. John Cornyn, a party leader, said he expects Senate Republicans to demand the same standards as Boehner as a condition to approving a debt ceiling increase.
Moderate Republican Susan Collins, meanwhile, said she hopes Washington can avoid the “brinksmanship” that took place last year which was so “unsettling” to the public and the markets.
- CNN’s Kate Bolduan and Ted Barrett contributed to this report.