The current era of budget brinksmanship in Washington appears to be over, as Republican leaders shift strategy ahead of midterm elections in November.
House Speaker John Boehner, the de facto leader of the Republican opposition to President Barack Obama in Washington, broke with the hardline Tea Party faction of his party and called a vote on raising the statutory debt ceiling in the United States on Tuesday.
It was a dramatic decision. Since 2010, when Republicans reclaimed the majority in the House of Representatives, Mr. Boehner’s tendency has been to try to appease the Tea Party. Members who identify with the movement dominate his caucus, and to pass legislation, he must either secure their support or seek votes from the Democratic minority.
The strategy was inherently confrontational, as the Tea Party had little interest in compromising with Mr. Obama. This turned routine business such as raising the debt limit and approving budgets into dramatic showdowns that rattled financial markets.
However, repeated fiscal standoffs have proved unpopular with the public. Polls showed most Americans blamed Republicans for shutting down the federal government for nearly three weeks in October, prompting party leaders to rethink their strategy.
Mr. Boehner’s tactical shift Tuesday follows a bipartisan budget agreement in December and an agreement last week on renewed farm policy that had languished in Congress for more than two years.
The House agreed to raise the debt ceiling until March, 2015, by a vote of 221 to 201. Mr. Boehner, Majority Leader Eric Cantor and Majority Whip Kevin McCarthy were among a group of 28 Republicans who voted in favour of the increase. Paul Ryan, the party’s vice-presidential nominee in 2012 and a potential candidate for president in 2016, voted no.
Only two Democratic congressmen defied Minority Leader Nancy Pelosi and voted against the measure.
U.S. stock markets rallied Tuesday, in part because traders’ moods were lightened by the prospect of budget peace in Washington.
Standard & Poor’s, the credit-rating agency, stripped the U.S. of its highest rating in 2011 because politicians insisted on turning every budget-related vote into a drama.
Failure to renew the Treasury Department’s borrowing authority would constitute a default because the government would be unable to meet a litany of financial obligations, including debt payments. That would wreak untold havoc on the international economy because U.S. bonds serve as collateral for countless transactions.
Treasury Secretary Jack Lew told lawmakers last week that he would run out of ways to stay under the debt ceiling.
“Fiscal policy makers should never put our nation in a situation where there’s a risk of default on the federal debt,” Janet Yellen, chairwoman of the U.S. Federal Reserve, said during testimony on Capitol Hill Tuesday. “It would be an extremely destructive thing to do.”
Mr. Boehner had been willing to court financial destruction in a bid to leverage concessions from Mr. Obama and Mr. Reid. In 2011, Mr. Boehner said every increase in the debt ceiling should be matched by an equivalent cut in government spending.
But Mr. Obama and Mr. Reid stopped playing that game. Last year, they said they no longer would negotiate over the debt limit, saying Congress has an obligation to pay for the measures it has passed. Polls showed the public preferred that message to the Republicans’ desire for confrontation.
Mr. Boehner has risked a revolt by allowing a vote on the debt ceiling. The Senate Conservatives Fund, a Tea Party group, called on its members Tuesday to demand Republican lawmakers depose Mr. Boehner as Speaker.
But since the government shutdown, Mr. Boehner’s focus has been on leading the Republican Party to victory in the midterm elections.
Business groups, disgusted by the government shutdown, now are fighting the Tea Party in primary races for Republican nominations. The party has a legitimate shot at winning the Senate, as seven seats are up for grabs in states won by Republican presidential nominee Mitt Romney in 2012. The Republicans need a net gain of six to win the majority.