CHN: Debt Ceiling Brinksmanship Loses its Appeal; Speaker Boehner Abandons the Boehner Rule
For those who want to force federal spending cuts, the need for Congress to increase federal borrowing authority periodically had seemed like a powerful leverage point. House Speaker John Boehner (R-OH) insisted that further increases in the debt limit be tied, dollar for dollar, to spending reductions over the next ten years. That was known as the Boehner Rule. With Federal Reserve Chair Ben Bernanke viewing federal default on debt as potentially disastrous and polls indicating that voters do not want default or government shutdown and would blame Republicans if either occurred, putting the Boehner Rule on the back burner seemed like a good idea. Instead, House Republicans put forth a bill to suspend the debt ceiling until May 19 (H.R. 325), which would give the U.S. Treasury the authority to continue borrowing even though the $16.4 trillion limit on borrowing established by law previously had been reached. The House passed the suspension of the debt ceiling on January 23, 285-144. Those voting yes included 199 Republicans and 86 Democrats; the bill would not have passed without bipartisan support.
The Senate followed suit and passed H.R. 325 on January 31, also with a bipartisan vote of 64-34. The President signed the legislation on February 4.
Although the debt limit will be re-imposed on May 19, analysts believe that the ability of the Treasury Department to juggle payments will mean that the next crisis point will not be until sometime next summer.
To show Congress is still serious about putting the nation’s fiscal house in order, the bill also requires both the House and Senate to pass budget resolutions by April 15. If the House or Senate fails to pass its own budget resolution, its members’ pay will be stopped. The House leadership has enjoyed pointing out that the Senate has not passed a budget resolution since 2009. This year, however, the new Senate Budget Committee Chair Patty Murray (D-WA) has announced the Committee will prepare a budget.
H.R. 325 does not require that the House and Senate agree on a final budget resolution. Given the chasm separating the budget priorities of the two houses, no one expects a final budget resolution to be adopted. That doesn’t matter much, because its main purpose is to set spending limits for appropriations, and Congress set those limits through FY 2021 when it passed the Budget Control Act of 2011. However, budget resolutions can also force the Senate to employ a procedure known as reconciliation to enable it to pass deficit reduction measures with a simple majority vote and no filibuster. Many analysts believe that a long-term deficit reduction plan will require such fast-tracking of Senate procedure, but it could be provided without a budget resolution, if Congress can agree to new legislation setting up a framework for a deficit reduction plan. Getting to yes on such a plan will not be easy.
The partisan divide in Congress means there may be more attempts to govern by crisis – allowing across-the-board spending cuts to take effect on March 1, for example, or threatening to shut the government down by not extending appropriations when they expire on March 27. But at least for the next 5 or 6 months, Congress has pulled back from threatening to force the government to default on its debt obligations.