Senate likely to pass 'No Budget No Pay' debt limit fix

Senate Democrats are likely to pass a House Republican bill to suspend the debt ceiling until May, ensuring that the government can pay its bills while lawmakers attempt to solve yet another raft of tricky fiscal issues this spring, Democratic aides said Tuesday.

The House is expected to vote on a bill Wednesday that would suspend the debt limit until May 18 and force lawmakers to pass a budget by April 15 or see their pay frozen until their chamber passes a spending plan. The White House said Tuesday that it would not oppose the bill.

And while the Senate may tweak the legislation, the short-term extension and pay freeze are likely to remain intact, according to senior Democratic aides.

Senate Democrats are looking to deal with looming March deadlines for across-the-board spending cuts and extending a resolution to fund the government through the budget writing process, a senior Democratic leadership aide said.

Forcing Senate Democrats to accept a short-term debt limit fix and write a spending plan, after years of refusing to pass a budget, would be a political victory for Republicans. But, if the bill passes, the House GOP will have also made a major concession in dropping its demand that debt limit legislation be tied to spending cuts.

And Democrats believe that by opting to suspend the debt limit, instead of increasing it, Republicans lose leverage in the next fight. Passing legislation to waive the country’s credit limit only undercuts the debt limit’s importance, Dems argue.

“If this is something that can just be ignored, why is it worth tanking the economy over,” a Senate Democratic leadership aide said.

Writing a budget also gives Democrats a vehicle for crafting tax reforms that bring in more revenues.

Republicans are betting that by passing a short-term debt limit fix, they can use the looming across-the-board spending cuts that kick in March 1 as leverage. The pending cuts are split 50-50 between military and discretionary domestic spending and Republicans are betting that Democrats don’t want to see domestic spending cuts any more than the GOP fancies military spending reductions.

But Senate Democrats are signaling that they’ll only consider replacing the cuts with increased tax revenue, a non-starter for Republicans. So right now, there is a real threat that the spending cuts could go ahead as planned.

Senate Democratic lawmakers signaled openness to the Republican plan on Tuesday, but were cagey about revealing their legislative strategy, which aides said was still being developed.

Asked about the GOP bill, Democratic Senate Majority Leader Harry Reid would only say, “I’m very glad that … they’re going to send us a clean debt ceiling bill.”

Senate Finance Committee Chairman Max Baucus, Reid’s point man on the debt ceiling, said, “My sense of it is that the House action is helpful.”

Democratic Sen. Claire McCaskill said Democratic fiscal strategy “would be, let’s quit playing political games, try to compromise and get something done.”

“We need to all quit trying to position ourselves politically for a ‘win’ and we need to start working to get this done,” she said. “I would like us to see, in a bipartisan way over here in the Senate, us put together -- a budget would be great -- but more importantly a long-term relief for the debt-ceiling along with long-term spending cuts that look at our long term debt without hurting our short-term economic recovery.”