Debt Ceiling Extended for Three Months; More Trouble Ahead

The House of Representatives put out one fiscal fire Wednesday, approving a measure to extend the Treasury Department’s borrowing authority to May 18, but there are more hot issues simmering on the sidelines as Democrats and Republicans continue to battle over government spending.

The House voted 285-144 to suspend limits on borrowing, with 33 Republican conservatives and 111 Democrats voting against the bill.

“The premise here is pretty simple,” House Speaker John Boehner said during the floor debate. “It says that there should be no long-term increase in the debt limit until there is a long-term plan to deal with the fiscal crisis that faces our country. This is the first step in an effort to bring real fiscal responsibility to Washington.”

The vote effectively delays the chance of a default by the federal government that could have sent the national and global economies into a tailspin. Leaders from the Democratic-controlled Senate indicated they would deal with the bill next week and expect it to pass without changes. President Obama’s office also indicated he would pass it.

“The president will not stand in the way of this bill becoming law,” White House press secretary Jay Carney said at his daily press briefing. “The president believes that we need to, as a country, do the responsible thing and without drama or delay pay our bills.”

Two More Issues Coming

In the meantime, two major issues are festering on the back burner: How to handle the $1.2 trillion in automatic spending cuts that are coming up March 1 and how to avoid a March 27 funding deadline that could force a shutdown of the federal government.

Neither Democrats nor Republicans have offered a solution for the problems.

“We know with certainty that a debt crisis is coming to America,” Rep. Paul Ryan, R-Wis., said on the House floor. “It’s not a question of if, it’s a question of when. And if there is a debt crisis, those who get hurt the worst are the ones who need government the most, our seniors, the poor.”

For now, House members are content not to have to make a final decision on what to do about the current debt ceiling level of $16.4 trillion. Republicans originally wanted to use the debt ceiling as leverage to get spending cuts from Democrats, but that proved an unpopular tactic with the public. Democrats wanted to do away permanently with the debt ceiling, but that proved unpopular with Republicans.

No Budget, No Pay

So the two sides kicked the can down the road three months, though they did include a timid addition to the bill that says both chambers must adopt budgets by April 15, or members will have their paychecks withheld until the start of a new Congress.

By law, Congress is supposed to pass a budget by April 15 each year, but the Senate has not passed a budget in three years.

“All we’re saying is, ‘Congress, follow the law. Do your work,’” Ryan said. “We owe our constituents more than that. We owe them solutions. And when both parties put their solutions on the table, then we can have a debate about how we fix the problem.”

The March 1 deadline for spending cuts is an offspring of the fiscal cliff legislation that was passed on New Year’s Day. Mandatory cuts of $55 billion each in Defense and domestic spending were supposed to kick in that day, but were postponed when the fiscal cliff deal was passed.

The March 27 deadline has to do with appropriations passed by the House, but never voted on by the Senate. The House decided in September to continue funding basic government operations at the same level as before, hoping the Senate would take up the matter and either approve or reject it. The Senate has done neither.

Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it seven years ago, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering college and professional sports, which are the fantasy worlds of finance. His work has been published by the Associated Press, New York Times, Washington Post, Chicago Tribune, Sports Illustrated and Sporting News, among others. His interest in sports has waned some, but his interest in never reaching for his wallet is as passionate as ever. Bill can be reached at bfay@debt.org.

Debt ceiling extended

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    Sources:

    1. Tiron, R. and Rowley, J. (2013, January 23). House Votes to Temporarily Suspend U.S. Debt Ceiling. Bloomberg. Retrieved from http://www.bloomberg.com/news/2013-01-23/house-votes-to-temporarily-suspend-u-s-debt-ceiling.html
    2. Lawder, D. (2013, January 23). Debt limit extension bill moves to vote in House. Los Angeles Times. Retrieved from http://www.reuters.com/article/2013/01/23/us-usa-fiscal-idUSBRE90M11F20130123
    3. Helderman, R. (2013, January 23). House votes to suspend debt limit. The Washington Post. Retrieved from http://www.washingtonpost.com/politics/hold-house-votes-to-suspend-debt-limit/2013/01/23/58f2013c-6574-11e2-85f5-a8a9228e55e7_story.html