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National Debt

Debt Limit Deal Details

  • October 28, 2013

    The beginning of October setup a 16 day showdown between House Republicans, the Democrat controlled Senate and the Obama White House over government spending and the debt limit. Republicans initially had demanded delaying or defunding Obamacare before they would agree to raise the debt ceiling or fund the government, but those demands faded over several weeks. Given Congress’ inability to pass the most basic of legislative measures, these must pass bills presented a rare opportunity to rein in government spending and change the trajectory of our nation’s fiscal path. Currently, over the course of a year, the U.S. Treasury borrows roughly $1 out of every $5 it spends and has racked up $16.7 trillion in debt.

    Despite days of intrigue and infighting, the final deal does not include any significant revisions to Obamacare. The narrow deal includes a stopgap measure that would fund the government through January 15th, and would suspend the debt ceiling until February 7th. That’s right – suspend, not increase. Meaning the government’s credit card has no limit at this point.

    The deal also establishes a framework for formal bipartisan budget negotiations to begin. Negotiators would be tasked with reporting by December 13th recommendations for longer-term spending levels and deficit reduction. This new conference committee is much like the failed “supercommittee” of last year, but without the trigger of automatic spending cuts, known as “sequestration” attached. Essentially lawmakers at this point have the ability to spend as much as they like without penalty.

    The Senate voted 81-18; The House voted 285-144 to pass this deal. Only Republicans opposed the deal in each chamber. See here how they voted: http://www.washingtonpost.com/blogs/the-fix/wp/2013/10/17/how-republicans-voted-on-the-shutdowndebt-ceiling-compromise/

    Full details of the deal follow below, which includes several unrelated spending measures:

    • Government reopened, funded until January 15, and employees paid retroactively to October 1
    • Debt ceiling cap lifted until February 7, and Treasury's ability to maintain "extraordinary measures" kept intact
    • Establish a budget conference committee between the House and Senate to reach an agreement on a longer term budget proposal
    • Craft a way of instituting income verification for applicants for health care on Obamacare exchanges.
    • The Act authorized back payment to the 800,000 government workers who were furloughed during the 16-day government shutdown.
    • The United States Army Corps of Engineers received an authorization increase of $2.2 billion in funding to improve a series of locks and dams on the Illinois-Kentucky border.
    • $450 million was allocated to help repair the damage in Colorado from the 2013 Colorado floods.
    • The United States Department of the Interior was allocated $36 million and the United States Forest Service was allocated $600 million to cover fighting forest fires and their damage.
    • Bonnie Lautenberg, the widow of Senator Frank Lautenberg (who died during 2013), was allocated a $174,000 death benefit.
    • The Act extends the sunset date on the Federal Lands Recreation Enhancement Act by one year, to December 8, 2015.
    • The Act does not block President Obama's proposal for a one percent pay increase for most federal civilian employees on January 1, 2014. The raise — which comes after a three-year federal pay freeze — was proposed by President Obama in August 2013, and according to existing law, automatically goes into effect unless blocked by Congressional budget legislation.

     


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