Fiscal Deadlines Fast Approaching

September 18, 2013

The Treasury DepartmentTwo deadlines are fast approaching and yet, Republicans and Democrats are still in a logjam over government spending and the debt ceiling. A short-term agreement must emerge to keep the government operating beyond Sept. 30 and a debt limit deal is needed by mid-October to avoid the risk of default.

However, lawmakers have been deadlocked for months over federal spending levels and the House and Senate have not agreed on any of the 12 spending bills for the fiscal year that begins on Oct. 1. The primary disagreement is over the continuation of the automatic, across-the-board spending reductions to domestic and military programs known as sequestration.

Additionally, in the House, Republicans are trying to resolve internal divisions over whether this spending bill deadline should be used as leverage for repealing or delaying the Patient Protection and Affordable Care Act (PPACA).  This divide prompted Republican leadership to cancel a scheduled September district work period (September 23-27), as they expect lawmakers will need to be in Washington that week to continue working toward preventing a government shutdown.

Meanwhile, even after Congress gets past that deadline, they next have to tackle an even more serious fiscal challenge, deciding how to raise the federal debt limit to prevent the government from defaulting on its obligations. Treasury Secretary Jack Lew warned Congress late last month that the extraordinary measures he has been using to prevent the debt ceiling from being breached will be exhausted in mid-October.

House Republicans continue to argue that, in exchange for their vote to increase the debt ceiling, there also should be further spending cuts and reforms. However, the White House and Democrats adamantly refuse to negotiate on raising the $16.7 trillion debt ceiling—which is projected to be hit by Oct. 18—saying the nation must pay its bills.

Furthermore, Republican leadership is also weighing the option of asking for a one-year delay in the implementation of the PPACA in exchange for raising the debt ceiling. The administration has specifically reiterated that it is not amenable to further changes to the PPACA.

Now, with just two weeks to go, any big bargain to resolve all of these issues in one large package before Oct. 1 is unlikely. Progress even on a short-term, carry-over spending bill known as a continuing resolution (CR)—to allow more time for such negotiations and to avert a government shutdown in two weeks—has sputtered.