Debt Ceiling Limit Draws NearFebruary 5, 2014
In October, President Barack Obama signed legislation that ended the 16-day government shutdown and allowed the Treasury Department to sell bills, notes and bonds without exceeding the borrowing cap—$16.7 trillion—until Feb. 7, 2014. With that deadline fast approaching, Treasury Secretary Jack Lew has indicated that the government will start using emergency measures after Friday to avoid a first-ever default on the national debt.
Last year, Lew was able to use “extraordinary measures” to keep from borrowing money for six months after the debt limit took effect. However, Lew does not believe he will have much room to maneuver this time as in previous debt limit crises. According to him, by Feb. 28, the U.S. will no longer be able to borrow to cover its expenses and has urged Congress to act without further delay to increase the debt ceiling.
House Speaker John Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.) have made it clear that, while they will not permit the nation to default on its debt, Republicans want more than just a “clean” debt ceiling increase. Instead they hope to negotiate either spending cuts or new legislation in exchange for increasing the country’s borrowing authority.
Some Republicans have floated the possibility of trading a one-year extension of the debt limit for either an approval of the controversial Keystone XL pipeline or a repeal of the “risk corridors” in the Patient Protection Affordable Care Act (PPACA), a provision which enables the government to share in the risk and gains in the marketplace. However, there is no consensus yet as to what issues will be brought up during the debate.
Meanwhile, the vast majority of Democrats will likely vote against anything except a clean debt ceiling increase. The Obama administration would like to see the ceiling lifted before Feb. 7 and have warned that a failure to raise the debt ceiling before the nation’s borrowing authority expires could invite the calamitous prospect of a default on U.S. sovereign debt.
NSBA us urging all small businesses to contact their lawmakers today and urge their attention to this critical issue.