Johnson Backs Away From Go-it-alone Debt Ceiling Plan

Speaker Mike Johnson on Tuesday backed away from a plan to address the approaching federal debt cliff in a party-line reconciliation package, acknowledging several major challenges that may force Republicans to deal with the borrowing limit in bipartisan talks with Democrats.

Those obstacles include fractious House conservatives and ongoing strategic disputes with the Senate. Addressing the debt limit in reconciliation is not “completely foreclosed,” Johnson said at a POLITICO Live event, but he said House leaders were “looking at all options.”

“I'm not wed to any of them,” he said.

Striking a deal with Democrats to raise the debt ceiling would enrage the House’s conservative hard-liners. But President-elect Donald Trump — who has urged Johnson and other leaders to quickly address the debt cliff — appears to be softening to the idea, according to House Republicans who attended meetings with Trump at Mar-a-Lago this weekend.

Several members raised the pitfalls of the reconciliation approach in those meetings, and Trump appeared open to instead dealing with it in the bipartisan government funding talks — potentially by tying it to federal disaster aid that could benefit wildfire-stricken Southern California.

The Treasury Department has not given a precise date when the federal government will potentially default, but Congress might only have a few months to act.

House Budget Chair Jodey Arrington (R-Texas), charged with writing the budget that will kick off reconciliation action, said Tuesday that it's still possible to raise the debt ceiling in the party-line package Republicans are crafting. He said he favors addressing "the flashing red light" of the borrowing cap alongside policy "that's going to help us right the ship" as the national debt tops $36 trillion.

"Listen, I prefer putting a debt limit [increase] alongside fiscal reforms," Arrington said. "There are going to be two primary fiscal policies in the one big reconciliation bill."

Republicans are running out of time to conceptualize the party-line package they are aiming to clear for Trump's signature by Memorial Day. Their decision on whether or not to include a debt limit increase must be written into the budget that the House and Senate each have to approve to jump-start the process, and House Republicans plan to unveil their proposal in less than a month.

Conservative hardliners are demanding deep spending cuts in exchange for supporting a debt limit hike, a major challenge if Johnson is going to keep his tight majority united. They want Johnson to uphold a plan GOP leaders floated in December to make $2.5 trillion in spending reductions as part of any reconciliation package that increases the debt limit.

But that level of cuts might only buy a short reprieve from default. Now Johnson is exploring punting the debt limit for the whole of Trump’s presidency, according to a person familiar with the matter. Doing so would require Republicans making significant concessions to Democrats in bipartisan negotiations — something sure to anger the House GOP’s right flank.

"Who knows what the Democrats are going to ask for," House Judiciary Chair Jim Jordan (R-Ohio) said Tuesday afternoon.

Asked by POLITICO’s Rachael Bade whether the debt-limit-in-reconciliation plan is now dead, Johnson said “it was meant to be a point of discussion” and “we have to begin somewhere.”

There are also persistent doubts that even if significant cuts are made, some House conservatives simply won’t vote for any bill that includes a debt ceiling hike. Johnson said he was confident even skeptical members would come along “if the conditions are right.” But he also noted some of the other political realities that could block such a route.

They include ongoing disputes with the Senate. He confirmed he spoke with Majority Leader John Thune about reconciliation planning several weeks ago, with Thune suggesting “it might be a heavy lift” to add a debt limit hike to the already tall reconciliation order.

A growing group of senior House Republicans are now coalescing around a push to address the debt limit as part of federal funding talks ahead of a March 14 shutdown deadline. Those talks would involve Democrats and would likely include wildfire aid to California.

Asked about a possible debt-limit-for-fire-aid deal, Johnson said, “We don't play politics with disaster aid.” But he added that there should be a discussion about policy strings that might be attached to the money to prevent future fires.