Pawlenty, Bachmann take divergent path on the debt

WASHINGTON - As the clock ticks toward a U.S. default, presidential candidates Michele Bachmann and Tim Pawlenty find themselves increasingly removed from the 11th-hour negotiations in Congress to raise the debt limit.

Instead, despite the growing consensus on Capitol Hill to take action, the Minnesota Republicans have emerged as two of the leading voices saying that the debt ceiling doesn't need to be raised at all to solve the crisis.

While Democrat and Republican leaders face off over a deal to raise the $14.3 trillion debt ceiling, Bachmann and Pawlenty have questioned the urgency of the White House deadline and pushed a plan they say could avoid default without raising the legal borrowing limit. As they campaign in Iowa, both presidential hopefuls have balked at Republican House Speaker John Boehner's plan to cut government spending in exchange for a debt-limit increase, which the Obama administration says it needs to pay the nation's bills after Tuesday.

Their opposition echoed the revolt of many rank-and-file Republicans in the House, particularly GOP freshmen who were elected in November in a wave of Tea Party fervor. But Republican leaders in the House and Senate have been looking for a way out of the impasse by raising the debt limit, which many economists view as critical.

Pawlenty praised Boehner for "leading the fight," but said he couldn't back the compromise plan, sticking to his support for an earlier House GOP bill calling for sweeping spending cuts, hard caps on federal spending and a balanced budget amendment.

Bachmann, a three-term House member, opposed even the "cut, cap and balance" legislation, saying it didn't go far enough. "She continues to oppose an increase in the debt ceiling," spokeswoman Becky Rogness said, "because there needs to be a fundamental restructuring in how Washington spends taxpayer dollars."

Bachmann has cosponsored long-shot legislation that would leave the current debt limit in place and avoid technical default by assuring only that bondholders and members of the military continue to get paid once the government runs short of cash.

'False choice'

Pawlenty, for his part, has argued for an alternative approach that would prioritize federal spending, rejecting what he calls the "false choice between more debt and default."

Like Bachmann, the former Minnesota governor questions the doomsday scenarios laid out by Democrat and Republican leaders alike, arguing that the nation would not be in technical default so long as it pays the interest on the debt.

"We've never been at this location before in terms of the debt-ceiling issue," Pawlenty said in a recent interview in Iowa. "So there's a lot of speculation about what the consequences would be."

Neither Bachmann nor Pawlenty has said what government bills shouldn't be paid to prioritize spending without raising the debt limit.

Jason Furman, deputy director of the National Economic Council, suggested that credit markets would take a dim view of any spending shortfalls, no matter how temporary. "Any small business would understand that if they weren't paying their suppliers and they went to the bank and said, 'Oh, we're still paying our interest, will you lend us a lot more?' that the bank would throw them out and consider them as if they were in default," he said.

'Out there'

In Washington, the default alarms have sounded across the political spectrum. In a recent letter to Congress, Bruce Josten of the pro-business U.S. Chamber of Commerce wrote that while spending must be reined in, "failure to raise the debt by [Aug. 2] would create uncertainty and fear, and threaten the credit rating of the United States."

Minnesota Democrat Al Franken, one of the liberals of the U.S. Senate, dramatized the potential security risks of suspending government operations by unveiling a large poster in the chamber on Wednesday that said, "Welcome Terrorists." Franken supports Democratic efforts to raise taxes on the wealthy to help close the budget gap, a proposition that Republican leaders have rejected.

Some Minnesota GOP strategists worry that the debate could isolate Pawlenty and Bachmann, particularly if Republicans in Congress finally agree on a deal to raise the debt limit in the next week, even without tax increases or ending the Bush-era tax cuts.

"It's gut-check time for the Republicans," Pawlenty said in Iowa. "I wish they wouldn't raise the debt ceiling, but if they do, they have to get something meaningful and significant for it."

But Bachmann has categorically opposed any increase in government debt, a position that sits well with her most ardent Tea Party backers.

"Michele's out there much farther in saying she won't vote for a debt limit increase," said former Minnesota GOP chair Ron Carey, who once served as Bachmann's chief of staff. "She's preaching to that 20 percent of the base that will jump up and down and cheer."

Carey, now a Pawlenty supporter, said the former governor faces a more delicate task. "He doesn't want to throw the Tea Party support to Bachmann by default, but yet he doesn't want to be so strident that he can't build a coalition," Carey said. "He walks a fine line."

Kevin Diaz is a correspondent in the Star Tribune Washington Bureau.