Republicans are gearing up for a new fight with President Barack Obama over the need to lift America’s borrowing limit early next year, raising concerns that the fiscal truce established in last week’s bipartisan budget deal may be shortlived. Paul Ryan, Republican chairman of the House budget committee, said his party planned to demand concessions from the White House in exchange for raising the country’s debt ceiling. Republicans would meet in January to discuss the options.
"We don’t want [to get] nothing out of this debt limit. We’re going to decide what it is we’re going to accomplish out of this debt limit fight," Mr Ryan said on Sunday. The budget deal he crafted with Patty Murray, a Democratic senator, dramatically reduces the threat of a government shutdown over the next two years and unwinds some of the budget cuts introduced in March under "sequestration". Many view the pact as marking the end of three years of vicious fiscal battles on Capitol Hill, but Mr Ryan’s comments suggest that tensions could flare up again soon and dealing a blow to the global economy as early as the first quarter of next year. The budget deal was passed overwhelmingly by the House of Representatives last week but faces its final hurdle in the Senate this week. It is expected to clear the upper chamber, but opposition from a number of high-profile Republican senators in recent days has left some uncertainty about the outcome. "I feel we’ll have a good strong showing from the Democratic side, but we need bipartisan support to pass it," Dick Durbin, a senior Democratic senator, told CBS on Sunday. He noted that some Republicans vying for the presidential nomination in 2016 and others were still worried about a backlash from the Tea Party, which could cause problems. "This is very difficult," he added. Renewed uncertainty over the debt ceiling comes as Federal Reserve officials prepare to decide on Wednesday whether to begin tapering – or slowing – the pace of their asset purchases in support of the US recovery. A strong jobs report for November increased the likelihood that the Fed might initiate a small reduction in the rate of bond buys, as did news of the budget agreement reached last week. But Mr Ryan’s comments might temper any enthusiasm among Fed officials about the fiscal environment on Capitol Hill. The US Treasury has signalled that the debt limit will have to be raised by February or early March at the latest to avoid a possible default, though some analysts believe there might be more breathing room. In August 2011 and October 2013, the US narrowly escaped running out of cash to pay its bills in two crises driven by political brinkmanship. Obama administration officials and many Democrats insist that raising the debt limit should not be the subject of negotiations because the new borrowing helps cover payments for past tax and spending decisions made by Congress. But Republicans have tried to force their agenda for deep spending cuts and reforms of big social programmes in conjunction with rises in the debt limit. "The right answer is they should just extend the debt limit way in advance and not have any sense of crisis at all. I hope that will happen," Jack Lew, US Treasury secretary, said last month. Mr Ryan’s comments on the debt ceiling follow days of open warfare between Republican leaders in Congress and outside conservative groups who opposed the compromise budget deal for increasing spending in the short term. John Boehner, the Republican House speaker, said last week that they had "lost all credibility" after forcing a government shutdown to try to defund the 2010 health law, a plan that backfired politically for their party. In a separate NBC interview aired on Sunday, Mr Ryan sought to play down divisions among Republicans, saying Mr Boehner "just got his Irish up" in frustration, and that he would "prefer to keep those conversations within the family". Taking a tough line on the borrowing limit would patch up the split between the Republican party leadership and conservative groups, but would also reignite tensions with business allies who have been pleased with the shift towards compromise in the budget deal. In the past, Republicans have asked for deep spending cuts in exchange for debt ceiling rises, but they may also revive their demands for changes to the 2010 healthcare law, given the flaws in the scheme’s rollout. Some Republicans may also argue for a framework for tax reform to be tied to a debt ceiling increase.