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Sunday, September 10th, 2023

U.S. House passes bill to defuse debt crisis – Consult with a Vancouver Mortgage Broker



adil Virani Vancouver Mortgage Broker

adil Virani Vancouver Mortgage Broker

The U.S. House of Representatives on Wednesday passed a Republican plan to allow the federal government to keep borrowing money through mid-May, clearing it for fast enactment after the top Senate Democrat and White House endorsed it.

The vote in the Republican-controlled House was 285-144, with no votes coming from 33 Republicans and 111 Democrats.

The measure avoids for the time being a repeat of the 2011 debt ceiling standoff that rattled markets and resulted in a downgrade of the government’s triple-A credit rating. The U.S. Treasury is expected to exhaust remaining capacity under the $16.4-trillion (U.S.) debt limit between mid-February and early March.

The House vote marked a sharp departure from Republican vows to use the debt ceiling issue as a way to extract spending cuts from President Barack Obama.

But House Speaker John Boehner warned immediately after Wednesday’s vote that Republicans would take the next opportunity – automatic budget cuts set for March – to demand “reforms” from Mr. Obama.

The automatic cuts, which were temporarily set aside earlier this month in a fiscal deal between the White House and Congress, are “going to go into effect” unless Mr. Obama makes concessions, Mr. Boehner said.

The bill aims to draw Senate Democrats into the debate by requiring both chambers to pass a formal budget resolution by April 15. If either the House or Senate fails to meet this deadline, lawmakers’ pay is suspended until they pass a budget.

Republicans have named the bill the “No Budget, No Pay Act of 2013.”

Senate Majority Leader Harry Reid said the Democratic-controlled Senate would take up the bill and pass it without changes. He and other top Senate Democrats praised the Republican plan for not requiring spending cuts to match the increase in borrowing authority.

Both Mr. Reid and President Barack Obama have called for a “clean” debt limit increase. The White House said on Tuesday that Mr. Obama would not stand in the way of the bill if it was passed by Congress.

“This proposal gives us something we can work with here in the Senate,” added Senator Charles Schumer, a New York Democrat.

Republicans backed the bill in the face of polls showing Americans blaming them, rather than Democrats, for the uncertainty surrounding the so-called “fiscal cliff” that was resolved around New Year’s Day by raising taxes on the wealthy.

House Democrats who voted against the bill complained that it was a politically motivated gimmick that created a new “fiscal cliff” in the spring.

The bill avoids an immediate threat of U.S. default by suspending limits on the government’s ability to borrow until May 19. It does not specify a dollar amount for debt ceiling increase, but allows borrowing as needed to meet federal obligations that must be paid by that date.

Congress would then have to agree on a new, longer-term debt ceiling increase around that time – a deal that would not likely come without a more comprehensive deficit reduction plan.

Mr. Boehner, who unveiled the short-term extension plan last week, said he and fellow House Republicans were committed to passing a budget that would be balanced in 10 years.

According to budget experts, achieving such a goal, especially in the absence of additional tax hikes, would require massive cuts in federal spending beyond any envisioned in previous Republican-backed budgets or in the deficit-reduction plans of panels such as the bi-partisan Bowles-Simpson commission on Fiscal Responsibility and Reform.

The government is currently on track for its fifth straight fiscal year with a deficit exceeding $1-trillion – a trajectory widely viewed as eventually leading to a debt downgrade.

“My goodness, we ought to be able to balance the budget over the next 10 years,” Mr. Boehner said on the House floor.

House Budget Committee Chairman Paul Ryan, who was the Republican vice-presidential nominee in the 2012 election, said the measure was aimed at prompting a robust debate in Congress over how to achieve a more sustainable fiscal path.

“We see this as a very defining moment for this session of Congress and our caucus on getting a down payment on the debt crisis, on averting it,” Mr. Ryan said at a media breakfast sponsored by the Wall Street Journal.

But House Democrats objected, saying it was irresponsible to set short-term debt limit deadlines that would keep a cloud of uncertainty hanging over financial markets and cause volatility and higher interest rates.

“This legislation sets up another fiscal cliff, another financial nightmare, another problem for the American people that we should avoid,” said Representative Rob Andrews, a Democrat from New Jersey.

Representative Sander Levin, the senior Democrat on the tax-writing Ways and Means Committee, told reporters: “We should not continue to have this sword of default over the heads of Congress and the American economy.”

The vote shifted the budget debate to the March 1 start of automatic spending cuts for military and domestic programs, and the March 27 expiration of funding needed to keep federal agencies operating.

Mr. Ryan said he believed that the automatic cuts, known as a sequester, would likely proceed without changes, because no alternatives have been advanced by Senate Democrats or the Obama administration.

The House last year passed two bills to replace the sequester cuts for fiscal 2013, sparing any reductions for military programs, while shifting more of the cuts onto many domestic programs aimed at aiding the poor, including the Medicaid health-care program and social services block grants.

After the “fiscal cliff” deal, signed by Mr. Obama on Jan. 2, raised taxes on the wealthy and delayed the start of automatic cuts, Congress faces about $85-billion in cuts for the remainder of fiscal 2013, which ends on April 14.

The budget plans that the legislation aims to enforce would set discretionary spending levels for fiscal 2014, which starts on Oct. 1.


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