Debt Ceiling Looms as Lawmakers Remain at Impasse

October 9, 2013

The Treasury DepartmentCongress and the White House are now in the second week of a government shutdown still deeply at odds, with Republicans proposing to recreate a Super-Committee for negotiations and the president now agreeing to a short-term deal to avoid going over yet another so-called “fiscal cliff” where lawmakers fail to raise the debt ceiling, thereby hampering the government’s ability to pay its bills.

During a press conference on Tuesday, President Barack Obama opened the door to a short-term debt ceiling increase in order to avoid going over the fiscal cliff and allow for broader negotiations between the White House and Congressional Republicans on a long-term deal. The president said he would negotiate about broader, long-term fiscal issues only after Congress reopens the government and approves a debt ceiling increase with no conditions.

While Obama and Congressional Democrats want a “clean” bill to raise the borrowing limit and fund the government, Republicans have demanded changes to the Patent Protection and Affordable Care Act (PPACA) and spending cuts in exchange for funding the government and raising the debt ceiling.

The president also mentioned his administration is exploring “all contingencies” if Congress does not increase the government’s borrowing limit by Oct. 17. The Treasury Department has said the debt ceiling must be raised by next week to ensure the government avoids a default on U.S. payment obligations that could spark a global recession. For his part, House Speaker John Boehner (R-Ohio) has said that Democrats have adopted an “untenable position.”

The latest move from House Republicans is to propose the establishment of the “Bicameral Working Group on Deficit Reduction and Economic Growth,“ a 20-member bipartisan, bicameral committee tasked with recommending overall levels of discretionary spending for fiscal 2014, changes in the debt limit and changes in direct spending programs. The House delegation would consist of six Republicans and four Democrats while the Senate delegation would be six Democrats and four Republicans, creating a 10-10 split overall. The super-committee idea isn’t a new one – a similar bipartisan, bicameral group of lawmakers was charged back in 2011 and 2012 to come up with a long-term fiscal deal to address the rising debt, but failed to produce any kind of compromise, which set in place broad cuts known as sequestration.

The House Rules Committee met on Tuesday on two new bills. The first new bill is H.R 3273, the Deficit Reduction and Economic Growth Working Group Act, which would create a bipartisan group of House and Senate lawmakers to seek an agreement on spending issues, including possible changes to mandatory programs, and increases in the debt limit. The other bill is H.J.Res. 89, which provides funding to pay the salaries of all “essential” federal employees who continue to work during the current government shutdown but who otherwise would not receive their pay until after the shutdown ends.

Both measures will be considered under a closed rule. The recommended rule provides that upon passage of both measures, the text of the working group bill (H.R. 3273) be added to the federal employee pay bill (H. J. Res. 89) before it is sent over to the Senate.

Last week, the Senate rejected a House attempt to form a conference committee to reconcile the clean Senate spending bill and the House bill that delayed the PPACA. Similarly, Obama did not seem keen to the idea of a new committee. Instead, Senate Majority Leader Harry Reid (D-Nev.) is making plans to try to move a clean debt ceiling increase through his chamber, though it is unclear whether he will be able to win the 60 votes necessary to overcome procedural hurdles.

Finally, at the press conference, Obama also warned that, as the government approached the debt ceiling, a default on the nation’s bill would be catastrophic for the American economy.

NSBA has been an outspoken proponent on the need for lawmakers to work together to address our fiscal issues, and is urging small businesses to contact their lawmakers today to support a responsible, long-term economic solution.