Econintersect: In the final hours of 16 October 2013 both houses of the U.S. Congress passed a deal to end a partial government shutdown and add enough headroom under the debt ceiling to keep the government functioning. Heralded as pulling the world back from the brink of a financial meltdown which would result if the U.S. could not meet its financial obligations and service its debt, the headlines seem hollow – only enough to enable government finances as far the first quarter of next year.
According to Reuters Republicans gained little from the stand-off that brought the government to the brink of running out of money:
The agreement also includes some income verification procedures for those seeking subsidies under the 2010 healthcare law. But Republicans surrendered on their latest attempt to delay or gut the healthcare package or include major changes, including the elimination of a medical device tax.
The congressional vote signaled a temporary ceasefire between Republicans and the White House in the latest struggle over spending and deficits that has at times paralyzed both decision-making and basic functions of government.
The Washington Post provided this summary:
“Employees should expect to return to work in the morning,” Sylvia Mathews Burwell, the White House budget director, said in a statement.
The measure also would guarantee those workers back pay for time spent at home, aid flood-ravaged Colorado and provide extra cash for fighting wildfires out West. And it would grant the District government, which relies on Congress to approve its budget, authority to manage its own affairs through the 2014 fiscal year.
Enforcement of the debt limit would be suspended until Feb. 7, setting up another confrontation over the national debt sometime in March, independent analysts estimated. Meanwhile, federal agencies would be funded through Jan. 15, when they might shut down again unless lawmakers resolve a continuing dispute over deep automatic spending cuts known as the sequester.
Whether the next debt ceiling encounter will be as fractious as this one is uncertain. The bill just passed establishes a bipartisan House-Senate committee to come up with long-term deficit reduction ideas to be presented to the full congress by 13 December. But the outcome of this effort may not amount to anything productive. The last time this was tried with a Senate committee in 2011 the attempt failed, resulting in the across-the-board cuts of the sequester.
However, 2014 in an election year and many house members may pull back from confrontation situations for fear of damaging reelection chances. There are some house members though who believe they have been elected to be, and will be reelected by being, disruptive.
The final hours of the crisis have been summarized in a three-minute video from The Washington Post.
Sources:
- U.S. Congress ends default threat, Obama vows to sign bill (Richard Cowan and David Lawder, Reuters, 16 October 2013)
- Congress sends Obama bill to end shutdown ( Lori Montgomery and Rosalind S. Helderman, The Washington Post, 16 October 2013)