House Will Vote to Suspend Debt Limit

January 23, 2013

pic-money-tax-budgetOn Jan. 23, the House plans to vote on a measure (H.R. 325) that would leave the $16.4 trillion debt limit intact but suspend it from the time the bill passes until mid-May. The declaration that the debt ceiling “shall not apply” means that the government could continue borrowing to cover its obligations to creditors until May 18.

As of Dec. 31, 2012, the U.S. reached the current debt limit of nearly $16.4 trillion, and the Treasury Department has been using “extraordinary measures” to avoid exceeding the debt limit.  According to Treasury, it is expected that the government’s ability to meet its current obligations will be exhausted between mid-February and early March of this year.

As laid out by House Speaker John Boehner (R-Ohio) at the Republican retreat, the strategy is intended to defuse the threat of a near-term government default while putting pressure on Senate Democrats to pass a budget, something they have failed to do for more than three years. With a budget in place, Republicans would require that a longer-term increase in the debt ceiling be tied to significant spending cuts.

Under the bill, Republicans seek to raise the debt limit to allow government borrowing through mid-April — long enough, they say, to give both chambers time to pass a budget for the next fiscal year. If either chamber failed to adopt a budget by April 15, that chamber’s members would then have their congressional pay withheld. It mandates that lawmakers’ paychecks be held in escrow starting April 15 unless Congress adopts a comprehensive framework for spending and tax policy.

The House Ways and Means Committee unveiled the measure Monday; it is scheduled for a hearing in the Rules Committee on Tuesday and to hit the House floor on Wednesday.

It is unclear how Senate Democrats will respond to the measure, assuming it is adopted by the House. However, Sen. Charles Schumer (D-N.Y.) said Democrats are planning to draft a budget for the first time in nearly four years

The administration released a statement on H.R. 325; saying the bill “…would temporarily allow the Congress to fund commitments to which it has already agreed.  A temporary solution is not enough to remove the threat of default that Republicans in the Congress have held over the economy.  The Congress should commit to paying its bills and pass a long-term clean debt limit increase that lifts self-inflicted and unnecessary uncertainty from the Nation’s economy.”

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