Some conservative members of Congress claimed raising the debt ceiling last fall was a non-issue, but would still not compromise. (Julie Percha/The Washington Post) 
 
 Some conservative members of Congress claimed raising the debt ceiling last fall was a non-issue, but would still not compromise. (Julie Percha/The Washington Post) 
 
 House Republican leaders spent Monday trying to finalize a plan to increase the Treasury’s borrowing authority and avoid a federal default by urging GOP lawmakers to rally behind a proposal that ties a debt-ceiling increase to a plan to restore full pension benefits for some military veterans. 
 
 House Speaker John A. Boehner (R-Ohio) called a “special conference meeting” in the Capitol basement, trying to find the right policy mix that would attract enough Republican and Democratic support for the measure to be approved, possibly as soon as Wednesday. 
 
 Republicans exiting the meeting stressed that Boehner’s team had made no final decision and that the proposal’s fate remained uncertain. “I believe we are on track,” said House Majority Leader Eric Cantor (R-Va.). “We had a really good discussion. We are going to talk to our members and work toward a resolution.” 
 
 Still in place is a backstop option that would essentially allow Democrats to approve a debt-limit hike with no strings attached, almost entirely on their own, according to GOP advisers. 
 
 Despite the uncertain fate, Boehner’s team moved ahead with the option linking a restoration of recently cut military pension benefits to a one-year extension of the Treasury’s borrowing authority. The cost of restoring that cut to military pensions, about $7 billion, would be offset by an extension, by one year, of planned automatic spending cuts to entitlement programs. 
 
 Republicans have been trying to finish the plan before the House adjourns Wednesday for a nearly two-week break. That would keep them from bumping up against the Feb. 27 date that Treasury Secretary Jack Lew has set as the deadline for Congress to increase his borrowing authority or risk a default on the more than $17 trillion in federal debt. 
 
 Whatever the outcome, Boehner’s proposal marked a stark retreat from the confrontational approach Republicans adopted in 2011, when the speaker wrung $2.1 trillion in savings out of federal agency budgets from President Obama in exchange for increasing the debt limit. 
 
 Lawmakers said Boehner and Cantor told them there was no debt proposal that could win a majority solely from the GOP side of the aisle. “I made my feelings clear — we should fight,” said Rep. Andy Harris (R-Md.). “There will be a vote on Wednesday and I sure know how I’m going to vote, and that’s firmly against the package.” 
 
 The new offer drew pointed criticism from conservative lawmakers and groups that have caused constant headaches for Boehner. “I think that’s the wrong place to go,” Rep. Jim Jordan (R-Ohio), a leading member of the House’s right flank, said of the proposal. “Obviously, we should honor our commitment to our veterans, but let’s do that in a separate bill and find savings elsewhere. I don’t think we should tie it to the debt ceiling, and I think other members will agree.” 
 
 Michael Needham, chief executive of Heritage Action for America, an influential conservative advocacy group on Capitol Hill, said Monday that his organization would probably oppose the measure, should it reach the floor. 
 
 But the criticism was combined with a general shrug from many conservatives who seem resigned to a debt hike happening. 
 
 Heritage Action has not mounted a campaign to push the leadership to move to the right, unlike in past fiscal battles when the group trimmed Boehner’s options through a pressure campaign from its grass-roots network. 
 
 Grover Norquist, the prominent anti-tax advocate, rejected any tinkering with a budget deal agreed to two months ago that included the savings from a slight reduction in the cost-of-living adjustment for pension plans of military veterans who are still working age. “Let a clean bill through without touching the spending restraints established in these budget agreements,” Norquist, president of Americans for Tax Reform, said in an interview. 
 
 Democrats have shown no interest in adding anything onto the debt-ceiling increase, and with more conservatives advocating a “clean” bill, that option became increasingly plausible. 
 
 “Republican leaders shouldn’t need another meeting to figure out that debt limit brinkmanship doesn’t work, because they are even hearing from their own tea party members that they should give up and walk back the ransom demands,” Sen. Patty Murray (D-Wash.), chairman of the Senate Budget Committee, said in a statement. 
 
 The military pension issue has been a political needle in each party’s side since the bipartisan budget agreement in December. Drafted by Murray and Rep. Paul Ryan (R-Wis.), that two-year outline used a collection of savings from other portions of the budget to loosen constraints on agency spending, including the modest nick to the military pensions. 
 
 An outcry went up that Congress had gone after the military, leading each side to say it would work to undo the cut. 
 
 The Senate cleared a preliminary hurdle Monday for a Democratic plan to restore the funding, but Republicans are demanding offsetting savings to the budget that could derail the effort by week’s end. 
 
 Boehner had hoped that attaching the military issue to the debt-ceiling increase would prove a perfect solution, adding a popular measure to a must-pass-but-unpopular bill. According to two people present at a lunch with his allies last week, Boehner said the maneuver would probably force Democrats to join with Republicans and would also win support from conservatives. 
 
 Such an outcome would allow Boehner to approve the debt ceiling with at least a majority of his House GOP caucus, saving face politically and winning passage of a bill that most of his rank-and-file support. At the start of Monday night’s meeting, Boehner and Cantor both talked up this plan and stressed the need for unity, according to the notes of several lawmakers inside the room. 
 
 Other GOP ideas, floated during the past week, were jettisoned by Monday, including the perennial fix to the way Medicare reimbursements are calculated. That legislation is now moving on its own separate track amid bipartisan talks. 
 
 Boehner and Cantor’s maneuvers came after a series of conservative huddles that created the general sentiment of not making this debt-ceiling battle an ideological showdown. 
 
 A group of House conservatives met with Heritage Action officials over the past few days, including dozens of Republicans attending the Heritage Foundation’s weekend retreat. Earlier Monday, a handful of members spoke at Heritage Action’s policy summit in Washington. The consensus from backroom talks at both events: Conservatives know Boehner is moving ahead and will not back him, but they are not going to make a coordinated effort to block his plan. ||||| House Speaker John Boehner signaled a clash with the White House and the Democratic-led Senate over raising the U.S. borrowing authority later this year. 
 
 Congressional Republicans are staking their ground in fiscal negotiations that once again could pose the threat of default or a government shutdown -- the recurring theme surrounding efforts to reduce the nation’s deficit since 2011. 
 
 “We’re not going to raise the debt ceiling without real cuts in spending,” Boehner, an Ohio Republican, told reporters in Washington yesterday. President Barack Obama and Senate leaders are refusing to accept anything short of a clean debt-limit increase. 
 
 “We will not negotiate over Congress’s responsibility to pay the bills that Congress ran up,” White House press secretary Jay Carney said when asked about Boehner’s remarks. 
 
 Any discussion about raising the debt ceiling must start with the premise that “we are the United States; we do not default,” Carney said. “The president believes Republican leaders share that conviction.” 
 
 Senate Majority Leader Harry Reid, a Nevada Democrat, said yesterday that Democrats are “not negotiating on the debt ceiling.” 
 
 Congress should pass a debt-ceiling increase without any “hijinks” to ensure a stable economy, Senator Chuck Schumer, a New York Democrat, told reporters July 18. “Attaching other issues to the debt ceiling is playing with fire,” he said. 
 
 Photographer: Susan Walsh/AP Photo House Speaker John Boehner of Ohio arrives for a news conference on Capitol Hill. Close House Speaker John Boehner of Ohio arrives for a news conference on Capitol Hill. Close Open Photographer: Susan Walsh/AP Photo House Speaker John Boehner of Ohio arrives for a news conference on Capitol Hill. 
 
 ‘Significant Cuts’ 
 
 Boehner said Congress needs to find “significant cuts” in federal spending to replace $1.2 trillion in across-the-board spending reductions over nine years. Republicans also say they’re determined to make changes to entitlement programs such as Medicare, Medicaid and Social Security. 
 
 Republican leaders have weighed whether to spell out the steps and timing of a tax-code rewrite as a trigger for raising the U.S. borrowing limit. Their goal is to curb tax breaks and use the resulting revenue to lower rates. 
 
 House Budget Committee Chairman Paul Ryan, a Wisconsin Republican, said he’s been working “for a long time” on a package of spending cuts and government overhauls to be timed with the debt-limit increase. The former vice presidential candidate didn’t provide details. A 2014 budget blueprint he proposed would balance the budget in 10 years. 
 
 Treasury Notes 
 
 Lawmakers fought for months two years ago over raising the nation’s debt limit, with Obama signing an increase into law on Aug. 2, 2011, the day the Treasury Department warned that U.S. borrowing authority would expire. 
 
 After Standard & Poor’s stripped the U.S. of its AAA top credit rating, the interest rate paid to finance the budget deficit dropped rather than rose. The yield on 10-year Treasury notes on Aug. 5, 2011, when S&P announced the downgrade, was 2.56 percent. The yield fell as low as 1.39 percent on July 24, 2012. As of yesterday, the yield had risen to 2.50 percent amid speculation the Federal Reserve is closer to winding down its asset-purchase program. 
 
 Lawmakers’ negotiations led to the Budget Control Act of 2011, which set discretionary spending caps for 10 years and created a process that resulted in the automatic spending cuts known as sequestration. The cuts started in March. 
 
 With the possibility of a fight over the debt limit after the five-week congressional recess that starts in August, Democrats said they worry about repeating the events of 2011. 
 
 ‘Drawing Lines’ 
 
 “It sure will sooner or later create a crisis situation,” Senator Carl Levin, a Michigan Democrat, said in an interview at the Capitol. “It’s that kind of total rigidity that makes it very difficult to get things done: throwing down the gauntlet here and just drawing lines in the sand.” 
 
 The need to increase the nation’s borrowing authority will collide with negotiations to fund the government for the 2014 fiscal year that begins Oct. 1. Negotiations will be centered on reducing the deficit and finding ways to replace the spending cuts. 
 
 Congress will have to first approve a short-term stopgap measure to fund the government instead of the regular appropriations bills because the work on those won’t be completed before Sept. 30, the end of the fiscal year. Even the short-term measure could be a heavy lift because Reid said he won’t accept a stopgap measure at the lower sequestration levels. 
 
 Senate Democrats instead want to replace the automatic, across-the-board cuts with a mix of spending cuts and tax revenue. 
 
 The White House Office of Management and Budget, which enforces the spending cuts, has projected the caps in 2014 would be $967.4 billion for security and non-security spending unless the sequester is repealed. 
 
 ‘Disaster’ 
 
 Funding at the lower levels “would be a disaster for the country, and I would do everything within my ability to oppose that,” Reid told reporters. 
 
 The economy is showing signs of generating more revenue, even if the recovery is sluggish. 
 
 Government tax receipts have climbed 14 percent above the level a year ago, according to Alex Brill, a research fellow at the American Enterprise Institute, who was interviewed by Bloomberg BNA. Economists credit economic growth as well as additional revenue from the tax increase Congress passed early this year. 
 
 The Congressional Budget Office projected in May that federal tax receipts would climb from $2.45 trillion in 2012 to $2.81 trillion in 2013, and to $3.78 trillion by 2017. 
 
 Earlier Vote 
 
 Congress voted at the end of January to suspend the nation’s debt limit until May 19, temporarily removing the risk of a default. When the ceiling was restored May 19, it increased to $16.7 trillion to reflect the government’s borrowing during the past few months. 
 
 By shifting money among government accounts, the Treasury Department can continue borrowing for several months, perhaps as late as October or November. 
 
 In May, House Republicans voted to exempt federal payments to creditors from the U.S. debt limit. The House measure would ensure that U.S. government bondholders will continue to be paid and that Social Security benefits won’t be interrupted if a standoff over the nation’s debt limit causes a cash crunch. The Obama administration would be left to decide which of the government’s other bills to pay using tax revenue. 
 
 The Democratic-controlled Senate didn’t take up the bill. 
 
 To contact the reporter on this story: Roxana Tiron in Washington at rtiron@bloomberg.net 
 
 To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net ||||| Senate Majority Leader Harry M. Reid (D-Nev.) and his leadership team encouraged President Obama to “take any lawful steps” to avoid default — “without Congressional approval, if necessary.” (Andrew Harrer/BLOOMBERG) 
 
 Democratic leaders in the Senate on Friday urged President Obama to consider bypassing Congress to prevent the nation from defaulting on its spending obligations if lawmakers cannot agree to raise the nation’s $16.4 trillion debt ceiling next month. 
 
 In a joint letter that served as a warning to congressional Republicans, Senate Majority Leader Harry M. Reid (D-Nev.) and his leadership team encouraged Obama to “take any lawful steps” to avoid default — “without Congressional approval, if necessary.” 
 
 The letter appeared to be an effort to push the White House to play hardball in its negotiations with Republicans as the federal government edges up against a legally imposed limit on borrowing. 
 
 Republicans have insisted that they will not increase the government’s borrowing authority without deep spending cuts, including to entitlement programs. On Friday they rejected the idea of unilateral action by the president. 
 
 “The Democrat leadership hiding under their desks and hoping the President will find a way around the law on the nation’s maxed-out credit card is not only the height of irresponsibility, but also a guarantee that our national debt crisis will only get worse,” said Senate Minority Leader Mitch McConnell (R-Ky.) in a statement. 
 
 Michael Steel, a spokesman for House Speaker John A. Boehner (R-Ohio), said that Americans “will not tolerate” hiking the debt ceiling without spending cuts. 
 
 
 
 Obama has said he considers raising the limit — which the nation will hit in February — an obligation of Congress because doing so allows the government to pay off debts it has already incurred. 
 
 Unlike in the summer of 2011, when Obama negotiated with Boehner in an effort to pair a debt-ceiling increase with a broad deficit reduction package of spending cuts and new tax revenue, the president has insisted he will no longer negotiate spending concessions in exchange for a higher ceiling. 
 
 That has left both sides without a clear strategy for how to proceed in what is likely to be a bitter and protracted fight. 
 
 In their letter, Reid, Sen. Richard J. Durbin (D-Ill.), Sen. Charles E. Schumer (D-N.Y.) and Sen. Patty Murray (D-Wash.) indicate that they will support Obama if he moves without Congress. 
 
 They wrote that the GOP position to block a debt-limit increase unless Democrats agree to cuts in Medicare and Social Security is “outrageous and absurd.” 
 
 They urge Obama to act unilaterally “in the event that Republicans make good on their threat by failing to act, or by moving unilaterally to pass a debt limit extension only as part of unbalanced or unreasonable legislation.” 
 
 One option some congressional Democrats have long advocated would involve Obama invoking the 14th Amendment to the Constitution to declare congressional action unnecessary for raising the limit. 
 
 The amendment holds that the validity of the country’s public debt “shall not be questioned.” Some constitutional experts believe that statement means that Congress cannot tie the government’s hands to borrow funds to meet obligations the government has already incurred. 
 
 The White House has indicated that Obama does not believe the Constitution gives him the right to ignore the congressionally imposed limit on borrowing. 
 
 Officials have been less definitive, however, about another route: allowing the Treasury Department to mint a trillion-dollar platinum coin to bolster the nation’s assets. The seemingly wacky idea has been gaining traction in recent days because of a law that allows the Treasury to mint coins of any value. 
 
 Asked recently about the coin, White House press secretary Jay Carney pointedly refused to rule it out as an option — though he repeatedly indicated that there “is no plan B” to congressional action. 
 
 In his statement, McConnell called the coin idea “ridiculous” and accused Democrats of considering “outright abdication of Congressional responsibility” in order to avoid cutting spending. The letter from Senate leaders came a week after a similar suggestion from House Minority Leader Nancy Pelosi (D-Calif.). She told reporters last week that if she were president, she would invoke the 14th Amendment to raise the debt ceiling “in a second.” 
 
 “I’ve made my view very clear on that subject,” she said. But, she added, “I’m not the president of the United States.”
– See if this sounds familiar: The White House and House Republicans appear headed toward a standoff over the debt ceiling this fall, reports NBC News. That's after John Boehner's statement this morning: “We're not going to raise the debt ceiling without real cuts in spending. It's as simple as that.” Democrats such as Harry Reid and Chuck Schumer said last week that Congress should pass an extension of the debt ceiling without strings attached, reports Bloomberg. Both sides appear to be jockeying for public opinion, with Boehner getting out ahead of President Obama's planned speeches on the economy starting tomorrow, reports the Hill. Boehner warned that Obama would be laying the ground for tax hikes. Treasury chief Jack Lew says the nation has enough money to operate without new borrowing until about Labor Day.