Busy Hill Agenda: Debt, Budget and ReconciliationOctober 22, 2015
On Oct. 15, the Treasury Department moved up the deadline for raising the government’s borrowing authority from Nov. 5 to Nov. 3, putting additional pressure on House Speaker John Boehner (R-Ohio) to make an effort to raise the debt limit before he resigns from Congress, which is expected to happen on Oct. 30.
Treasury Secretary Jacob Lew wrote a letter to House Speaker Boehner advising him that based on most recent information; he now estimates that extraordinary measures will be exhausted two-days prior than his original estimate. Lew has been employing these extraordinary measures since this past spring to extend our borrowing authority in the absence of congressional action.
The announcement puts more pressure on congressional leaders to finalize a plan for tackling this critical issue. Lawmakers are only scheduled to be in session for 10 days before Nov. 3 and Treasury insists that is the day the government will run out of room to borrow if the debt limit is not increased. Lew urged Congress to act as soon as possible and warned about the implications of Congress waiting until the deadline to act—including harm to business and consumer confidence, threat of raising short-term borrowing costs for taxpayers and potentially resulting in negatively impacting the credit rating of the U.S.
While Republican leaders have not proposed a specific debt limit increase plan yet, they have emphasized that they would not allow the U.S. to default. House Minority Leader Nancy Pelosi (D-Calif.) has urged Republican leadership to quickly approve a clean debt limit increase without any policy changes attached.
Meanwhile, budget negotiations between Republicans, Democrats and the White House have been ongoing, but there have been little signs of progress. Democrats have recently announced they will not accept changes to entitlements as part of a budget deal to increase government spending, increasing the likelihood the deal will be limited to one year rather than the two-year deal that Senate Majority Leader Mitch McConnell (R-Ky.) was originally hoping to pass. Republicans have reaffirmed that they will not accept tax increases, so any revenue increases in the deal will likely be limited. The current Continuing Resolution (CR) funding the federal government runs out on Dec. 11, and Congress will have to have a budget deal or pass another CR by then to keep the government open.
On Oct. 23, the House is expected to consider a budget reconciliation package. The bill would repeal significant parts of the Patient Protection Affordable Care Act (PPACA) and defund Planned Parenthood for one year. The bill would repeal the PPACA’s individual and employer mandates, the medical device tax, the Cadillac tax on premium insurance plans, and the Independent Payment Advisory Board. Overall, the bill would reduce deficits by $78.9 billion over ten years, reducing revenue by $199.3 billion and spending by $278.2 billion. The reconciliation bill is not subject to filibuster, and will only need a simple majority vote in the Senate. This will be the first time Republicans are expected to send a bill to President Obama that overturns key aspects of the PPACA, but he is expected to veto it.