Boehner to Talk Debt in NY

House Speaker John Boehner will step up his efforts Monday to lay out a strategy for raising the debt ceiling to a crowd heavy on Wall Street players who are anxiously watching the fierce debate over the debt ceiling unfold.

In a speech to the Economic Club of New York in Midtown Manhattan, the Ohio Republican is set to reiterate to leading financial executives that he believes that reforming Medicare should be part of negotiations in raising the debt ceiling, saying that there needs to be “an honest conversation,” because the program is on an “unsustainable path if changes are not made,” according to sources familiar with the speech. Boehner also is expected to advocate for immediate cuts rather than deficit and debt targets preferred by some Democrats.

After his talk, Boehner will take questions from two prominent Wall Street players at the intersection of Washington power: Peter G. Peterson, the private-equity giant who worked for President Richard Nixon, and Observatory Group CEO Jane Hartley, who worked for President Jimmy Carter.

The speech coincides with the start of public posturing between House Republicans and Democrats in Congress and the White House over raising the debt ceiling. With a class of debt-averse Republican freshmen threatening to vote against raising the borrowing limit, Boehner must reassure the financial sector that Congress won’t rattle markets and send the fragile economy into a tailspin.

At the same time, Boehner must not appear to sell out members of his conference, many of whom won election running against raising the debt limit and want changes to entitlement programs.

Boehner’s public insistence that reforming Medicare stay a part of debt ceiling negotiations could reaffirm a concern among Wall Street types that Republicans are driving a hard bargain on the limit and will take the negotiations up to the last minute. Boehner said last week Congress must now cut trillions, not billions.

But it could reassure markets and financial players that the GOP is taking seriously — at least with words — the need to do something about the nation’s fiscal situation, even as the 2012 presidential election looms. But in the speech, Boehner is not expected to say specifically that Medicare reforms must be part of any deal. 

This week, House Majority Leader Eric Cantor (R-Va.) also will be in the Big Apple for a series of long-planned meetings with financial executives, including New York Stock Exchange CEO Duncan Niederauer. Cantor will ring the opening bell at the exchange Tuesday.

The leaders’ appearances in New York, while not coordinated, underscore the importance of the financial community in House Republican politics. Top Republicans have been in frequent contact with financial industry leaders over the debt ceiling.

The question-and-answer session at Boehner’s event will be particularly interesting, as Boehner’s public interactions over policy and politics are largely limited to Capitol Hill reporters and occasional television appearances.

Peterson, a billionaire investment banker, served as commerce secretary for a year under Nixon. He went on to chair Lehman Brothers and made the bulk of his riches after he founded the private-equity firm Blackstone Group.

In 2008, he put $1 billion into the Peter G. Peterson Foundation, which seeks to bring attention to the nation’s fiscal woes. The foundation has praised the Republicans’ 2012 budget, saying its architect, House Budget Committee Chairman Paul Ryan of Wisconsin, “deserves significant credit for looking beyond the current fiscal year and leading an effort to put forward a budget proposal that addresses many of the drivers of our long-term debt.” Peterson donated $12,000 to the RNC in the 1990s, according to federal election records.

Hartley, a former Carter administration employee, is CEO of the Observatory Group, a political and economic consulting firm. She has been a big Democratic donor, including giving to the campaigns of former Sen. Chris Dodd of Connecticut, Rep. Barney Frank of Massachusetts, President Barack Obama and other lawmakers and to state parties.

While he’s in Manhattan, Boehner will raise money at the St. Regis Hotel on Manhattan’s East Side, where Mayor Michael Bloomberg is set to appear.

The New York appearances come after news that the debt ceiling deadline is further off than expected. The Treasury recently estimated that the nation will hit the debt ceiling in August, but the debate over raising it is already red hot in Washington.

But the message from Capitol Hill has hardly been clear. Republicans have had trouble explaining their goals, versus accepting the realities of divided government.

Last week, Republicans were all over the map on strategy after Ways and Means Committee Chairman Dave Camp of Michigan and Ryan indicated that reforming Medicare would not be part of the negotiations over the legislation. Boehner and Cantor, while expressing support for keeping Medicare reforms as part of the debate, have also both said that they understand their limitations, considering Democrats control the Senate and the White House.

Friday evening, in a sign of unity after a disjointed week, GOP leadership, along with Ryan and Camp, released a statement saying “everything must be on the table except increasing taxes.”

Freshmen, who voted en masse for the Ryan budget, largely want entitlement reform dealt with.

“I made a promise that I’m going to protect our seniors who are receiving Social Security and receiving Medicare, and I fully intend on supporting that,” Rep. Scott Tipton (R-Colo.) said. “We understand that going forward, the numbers don’t lie: We’re running out of workers to be able to fulfill that as baby boomers come on, so we’re going to have to be looking at those alternatives. There are some ideas on the table that Ryan put out — that’s the beginning point. That’s not the end point.”

Top GOP aides say Treasury Secretary Timothy Geithner’s announcement pushing back the date on which the nation will reach the debt limit just makes it more difficult to push hesitant freshmen into action.

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