Senate Leaders 'Very Close' on Budget/Debt Limit Deal

October 16, 2013 12:52 AM
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Tentative Senate agreement comes after House approach falters

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) have reportedly agreed on a bipartisan fiscal plan to reopen the government and raise the debt ceiling after a House alternative was pulled back Tuesday due to a lack of GOP support. The Senate agreement details were being finalized late Tuesday, but procedural questions, such as the number of amendments to be allowed, were being discussed. It could be unveiled as early as this morning.

Some details of the tentative Senate deal: It would reopen the government by extending current funding levels of $986 billion through Jan. 15, lift the debt ceiling until Feb. 7 and start a budget conference with instructions that it report a broader budget deal by Dec. 13. It would require stricter efforts to verify the income of individuals who apply for subsidies under the Affordable Care Act/ObamaCare, but not delay the reinsurance fee. And, it would not prohibit the Treasury Department from using extraordinary measures when approaching a debt limit and would give agencies more flexibility to deal with automatic across-the-board spending cuts known as sequestration.

The goal is to get cooperation from all senators to expedite the process of passing the bipartisan deal.

The aborted House approach details: Like the Senate plan, the House GOP proposal would have reopened the federal government by extending the current $986 billion level of spending through Jan. 15 and raising the debt limit through Feb. 7 while also convening a budget conference to talk about a broader budget deal. But the modified House plan shortened the stopgap spending plan to Dec. 15 and dropped provisions to hold a budget conference. And unlike the Senate proposal, the House GOP plan would deny Treasury the authority to use extraordinary measures to deal with an approaching debt limit and deny employer contributions to health insurance coverage for lawmakers, President Barack Obama, Vice President Joe Biden and Cabinet secretaries. The modified House plan included congressional and White House staffs.

On a procedural level, receiving a legislative message from the House may be crucial as it would expedite Senate consideration, a potentially important factor as the calendar nears Oct. 17, the date on which the Treasury Department will exhaust its borrowing capacity under the current $16.699 trillion debt limit.

Ratings agencies send warnings to Washington. Fitch Ratings, one of the three largest credit ratings agencies, put the AAA credit rating of the US on Ratings Watch Negative (RWN) due to the congressional uncertainty. “Although Fitch continues to believe that the debt ceiling will be raised soon, the political brinkmanship and reduced financing flexibility could increase the risk of a US default,” Fitch said. “Negotiations over raising the debt ceiling (following the episode in August 2011) risks undermining confidence in the role of the US dollar as the preeminent global reserve currency, by casting doubt over the full faith and credit of the US,” the statement said. “This ‘faith’ is a key reason why the US ‘AAA’ rating can tolerate a substantially higher level of public debt than other ‘AAA’ sovereigns.” But Standard and Poor’s is not likely to downgrade the United State’s credit rating, Marie Cavanaugh, the firm’s lead analytical manager, said Tuesday. “We do think the debt limit will be raised, perhaps at the 11th hour,” Cavanaugh said at a panel discussion organized by House Financial Services ranking member Maxine Waters (D-Calif.). She cited historical precedent as a major factor in S&P’s belief that Congress, despite a painful political process, will raise the ceiling. Standard and Poor’s downgraded the country’s rating in 2011 amid that summer’s debt ceiling crisis.

Comments: House Republicans are increasingly showing they cannot govern. House Speaker Boehner is already too late in proving he can rise above the fringe conservative wing of his party. Bipartisan leaders in the Senate have taken over, but reports have already surfaced that even if the tentative Senate plan is approved, more hurdles are ahead with the same House wing whose only true element seems to be no compromise and unrealistic goals. American voters are not amused but saddened and outright disgusted with Washington, based on my talks with many of them after recent speeches.

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.






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