Wednesday, October 16, 2013

Senate passes Debt Bill....At Last

The US Senate has passed a bill to reopen the government and raise the federal debt limit, with hours to spare before the nation risks default. The Democrat-controlled upper chamber's bipartisan compromise won swift approval by 81 votes to 18.

It is now being debated by the House of Representatives, whose Republican leadership has begrudgingly said it will support the measure. It comes hours before the deadline to raise the $16.7tn limit.

The deal would yank the US back from the brink of a budgetary abyss by extending the treasury's borrowing authority until 7 February. It would also fund the government to January 15, reopening closed federal agencies and bringing hundreds of thousands of furloughed employees back to work.
And the bill would create a panel of Senate and House members to draw up a longer-term budget agreement.

Shortly after Wednesday evening's vote, President Barack Obama said at the White House there was "still a lot of work ahead of us, including our need to earn back the trust of the American people".

"We've got to get out of the habit of governing by crisis," the Democratic president added.
"My hope and expectation is everybody has learned there's no reason why we can't work on the issues at hand, why we can't disagree between the parties without still being agreeable and make sure that we're not inflicting harm on the American people when we do have disagreements."

Also speaking after the vote, Senate Democrat Majority leader Harry Reid said: "Let's be honest, this is pain inflicted on a nation for no good reason and we cannot, cannot make the same mistake again."

 All along Obama has said he would refuse to pay a ransom and it looks like his refusal to bargain has paid off. In the House, the Democratic caucus was expected to be joined by a number of moderate Republicans in voting for the bill.
"We're going to pass it in the House," Democratic House Minority leader Nancy Pelosi said earlier.

The US Treasury has been using what it has called "extraordinary measures" to pay its bills since the nation reached its current debt limit in May. It said those methods would be exhausted by 17 October, leaving the US unable to meet all of its debt and other fiscal obligations.

Politicians, bankers and economists had warned of dire global economic consequences unless an agreement to raise the US government's borrowing limit was reached.

Meanwhile, ratings firm Standard & Poor's said on Wednesday that the partial US government shutdown, the first in 17 years, had already shaved $24bn from the American economy and would cut growth significantly in the fourth quarter.

Senate debt deal

  • Funds US government to 15 January 2014; suspends debt limit to 7 February 2014
  • Establishes committee of House and Senate to broker longer-term budget deal
  • Guarantees back-pay for furloughed federal workers
  • Income verification for those receiving insurance subsidies through healthcare law

Spurred on by hardline conservatives, congressional Republicans triggered the standoff on  October 1st when they forced the shutdown by demanding that President Obama defund or delay his signature healthcare overhaul. But under the compromise now being voted on the law commonly known as Obamacare escapes relatively unscathed.

Congressional Republicans, who have borne the brunt of blame in opinion polls for the budget row, conceded defeat on Wednesday.
"We fought the good fight," Mr Boehner said in an interview with an Ohio radio station. "We just didn't win."
Meanwhile, the political autopsy has already begun. "This has been a really bad two weeks for the Republican Party," Republican Senator Lindsey Graham said.

Senator John McCain, who was the party's 2008 presidential nominee, told the upper chamber floor the budget standoff had been "one of the more shameful chapters I have seen in the years I have spent here in the Senate".

Graph showing US debt ceiling and which party holds presidency, House/Senate

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