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Greenspan Gives GOP Hope on Debt Limit

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House Republicans wary of the Obama administration's Aug. 2 deadline for raising the debt ceiling think they have support for their skepticism from a surprising source former Federal Reserve Chairman Alan Greenspan.

Greenspan met with a small group of House Republican Policy Committee members Monday afternoon.

Republican sources familiar with the meeting said their takeaway from Greenspan's presentation was that the administration has more wiggle room than it is letting on if a final deal on raising the
$14.3 trillion debt ceiling is not reached by the proposed deadline.

Rep. Steve Scalise (R-La.), who met with Greenspan but declined to comment on their discussion, said that while the exact date of the debt ceiling is in doubt, the problem is not.

"They've already moved the deadline, so that shows that there's some flexibility," Scalise said. "But we know it's coming."

Scalise, however, said it is the White House that is not taking the situation seriously. "Rather than use scare tactics ... it's time for them to have a serious conversation on spending cuts," he said.

Greenspan clarified his comments Wednesday in an email.

"I said that the August 2 deadline is based on forecasts of daily revenues and outlays and that the actuals could change the August 2 deadline by a few days either way," Greenspan wrote.

Skepticism about the deadline has been a theme within the GOP during the debt limit discussion, given the Obama administration's history of creating deadlines in order to pass massive pieces of legislation, such as the auto bailout and the stimulus bill over the past two years. Additionally, Treasury Secretary Timothy Geithner's contradictory statements on when the debt limit must be raised have bolstered critics' complaints. Geithner first said in January that the borrowing ceiling could be hit as early as March 31. That forecast changed to April 5, then to July 8, and then in May he changed the deadline to Aug. 2.

Rep. Dan Burton discounted the threat that the financial system would go into a free fall if the debt ceiling isn't raised by early August.

The Indiana Republican said that "if they don't have the votes to extend it," passage could be delayed, but that in the end "they'll find a way, don't worry."

Rep. Scott Garrett (R-N.J.) also said he has been told by financial experts that the markets would be affected more adversely by the decision to not make structural changes in the final package.

Still, Republican leaders said a solution must be found soon.

House Majority Whip Kevin McCarthy said there are clear signs that the debt ceiling is approaching and that Congress and the administration need to come to an agreement on cutting spending and raising the limit.

"If it's not Aug. 2, it's right around there," the California Republican said. He also said the GOP has acknowledged the situation is coming to a head, noting the involvement of Majority Leader Eric Cantor (R-Va.) in the bipartisan debt negotiations.

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