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House GOP weighs repealing military pension cuts as condition for federal debt limit increase

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WASHINGTON - House Republican leaders were considering a plan Monday to reverse a recently passed cut to military pensions as the price for increasing the government's borrowing cap.

House Republican aides said party leaders planned to float the idea to rank-and-file GOP lawmakers at a meeting in the Capitol on Monday evening. The aides spoke on condition of anonymity because they were not authorized to be identified by name discussing strategy.

It's not clear that the plan will fly with Democrats. Their votes would be needed to help pass the measure since some Republicans refuse to vote to raise the debt ceiling under any circumstances. A spokesman for House Minority Leader Nancy Pelosi, D-Calif., said Democrats will continue to insist that any debt limit legislation omit add-ons, even bipartisan proposals like repealing military pension cuts.

White House spokesman Jay Carney sidestepped a question about whether President Barack Obama would sign debt ceiling legislation that included restoration of full benefits for military retirees, reiterating the White House position that Obama would not negotiate on raising the borrowing limit.

"I'm not going to get into a 'what if this were in the bill or that were in the bill,'" Carney told reporters. "Our position has not changed. It hasn't changed for a long, long time. We're not negotiating over Congress' responsibility to pay its bills."

Carney added that "we're not going to pay ransom on behalf of the American people to Republicans in Congress so that Republicans in Congress fulfil their constitutional responsibilities."

The House GOP's move comes as Senate Democrats have scheduled a test vote on repealing the cuts for Monday afternoon.

The cuts to cost-of-living pension increases for military retirees under the age of 62 were part of December's budget agreement, backed by House Budget Committee Chairman Paul Ryan, R-Wis.

The reduction has sparked an uproar among advocates for veterans, and lawmakers in both parties want to repeal it. The 10-year, $6 billion cost of cancelling the cut would be borne by extending for an additional year a 2 percentage point cut to Medicare reimbursements to doctors and hospitals, as well as cuts to a handful of other benefit programs. Those cuts, known as sequestration, would now extend through 2024.

Time is running out for lawmakers to act to lift the debt limit. Treasury Secretary Jacob Lew told lawmakers last week that Treasury will exhaust by Feb. 27 its ability to employ accounting manoeuvrs to borrow to pay its bills.

Lew told congressional leaders on Monday that he had begun tapping two large government worker retirement funds to clear room under the debt limit. The action involving the Civil Service Retirement and Disability Fund will provide $50 billion to $75 billion in additional borrowing room while tapping the Government Securities Investment Fund will provide about $175 billion in borrowing room, Lew estimated.

Lew announced that he would suspend payments to these two pension funds and would also draw down investments made in the funds. Previous Treasury secretaries have also employed this bookkeeping manoeuvr. Once Congress approves a new debt ceiling, the Treasury makes the funds whole by replacing the withdrawn funds and lost interest earnings.

Lawmakers temporarily suspended the borrowing limit last October in an agreement that ended a government shutdown and extended the federal borrowing limit. With a fresh extension of borrowing authority now needed again, the GOP debt limit plan is likely to employ the same approach and suspend the debt limit through early next year.

Raising the limit is needed so the government, which ran a $680 billion deficit last year, can borrow enough to pay all its bills, including Social Security benefits, interest payments on the accumulated debt and government salaries.

After last year's 16-day shutdown and accompanying debt battle, Republicans controlling the House are no longer interested in a big fight with Obama over raising the borrowing cap, preferring to keep the election-year focus on Obama's unpopular health care law.

Obama gave in to GOP demands in 2011 to pair a $2.1 trillion increase in the debt limit with an equal amount in spending cuts, mostly to the Pentagon and domestic agency operating budgets. He has since refused to negotiate over the debt limit.

Republicans last year gave Obama two debt increases with only modest add-ons, like a provision to force the Senate to pass a federal budget.

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