GOP ‘won’t budge’ on spending-cut demands in debt-ceiling fight, says Rep. James Comer

Republicans who gained control of the House in the US midterm election “campaigned on the the fact that we were going to be serious about spending cuts,” Comer, who heads the House Oversight Committee, said Sunday on CNN’s “State of the Union.”

The Democratic-led Senate “is going to have to recognize the fact that we’re not going to budge until we see meaningful reform with respect to spending,” he said.

Prospective talks on raising the debt ceiling are quickly emerging as a potentially global flashpoint. US Treasury Secretary Janet Yellen said last week the department will begin taking special accounting maneuvers on Jan. 19 to avoid breaching the debt limit and urged lawmakers to boost the ceiling to avert a US default.

“The debt ceiling is no doubt going to be a knife fight,” Representative Tony Gonzales, a Texas Republican, said on “Fox News Sunday.” 

Yellen’s warning kicked off what is likely to be a prolonged political battle over US fiscal policy, a showdown that could strain financial markets and elevate dangers for an economy battling inflation and already facing the risk of recession. Economists expect the Treasury will run out of cash around August if the debt ceiling isn’t boosted.

Rep. John Garamendi, a Democrat from California, said using the debt ceiling as leverage could backfire on Republicans. 

“Republicans should learn from their own history that using the debt limit as a lever to gain some sort of political advantage or some policy change really doesn’t work well for them and terrible for the American economy,” he said on Fox News.

Some economists and bond strategists are warning of the risk of the kind of turmoil seen in 2011, when a debt-ceiling standoff led to S&P Global Ratings downgrading the sovereign US rating from AAA. Equities tumbled around the world and US consumer confidence was hit.

–With assistance from Ian Fisher.