Senator: Deal reached to avoid default and open government

Senate leaders announced last-minute agreement Wednesday to avert a threatened Treasury default and reopen the government after a partial, 16-day shutdown. Congress raced to pass the measure by day's end.
Associated Press
Oct 16, 2013

The Dow Jones industrial average soared on the news that the threat of default was fading, flirting with a 200-point gain in morning trading.

"This is a time for reconciliation," said Senate Majority Leader Harry Reid of the agreement he had forged with the GOP leader, Sen. Mitch McConnell of Kentucky.

McConnell said that with the agreement, Republicans had sealed a deal to have spending in one area of the budget decline for two years in a row, adding, "we're not going back."

One prominent tea party lawmaker, Sen. Ted Cruz of Texas, said he would oppose the plan, but not seek to delay its passage.

That was a key concession that signaled a strong possibility that both houses could act by day's end. That, in turn, would allow President Barack Obama could sign the bill into law ahead of the Thursday deadline that Treasury Secretary Jacob Lew had set for action to raise the $16.7 trillion debt limit.

Officials said the proposal called for the Treasury to have authority to continue borrowing through Feb. 7, and the government would reopen through Jan. 15.

There was no official comment from the White House, although congressional officials said administration aides had been kept fully informed of the negotiations.

While the emerging deal could well meet resistance from conservatives in the Republican-controlled House, the Democratic Leader, Rep. Nancy Pelosi of California, has signaled she will support the plan and her rank and file is expected to vote for it in overwhelming numbers.

That raised the possibility that more Democrats than Republicans would back it, potentially causing additional problems for House Speaker John Boehner as he struggles to manage his tea party-heavy majority.

Boehner and the House Republican leadership met in a different part of the Capitol to plan their next move. A spokesman, Michael Steel, said afterward that no decision had been made "about how or when a potential Senate agreement could be voted on in the House."

The developments came one day before the deadline Lew had set for Congress to raise the current $16.7 trillion debt limit. Without action by lawmakers, he said, Treasury could not be certain it had the ability to pay bills as they come due.

In addition to raising the debt limit, the proposal would give lawmakers a vote to disapprove the increase. Obama would have the right to veto their opposition, ensuring he would prevail.

House and Senate negotiators would be appointed to seek a deficit-reduction deal. At the last minute, Reid and McConnell jettisoned a plan to give federal agencies increased flexibility in coping with the effects of across-the-board cuts. Officials said that would be a topic for the negotiations expected to begin shortly.

Despite initial Republican demands for the defunding of the health care law known as Obamacare, the pending agreement makes only one modest change in the program. It requires individuals and families seeking subsidies to purchase coverage to verify their incomes before qualifying.

There were some dire warnings from the financial world a day after the Fitch credit rating agency said it was reviewing its AAA rating on U.S. government debt for possible downgrade.

John Chambers, chairman of Standard & Poor's Sovereign Debt Committee, told "CBS This Morning" on Wednesday that a U.S. government default on its debts would be "much worse than Lehman Brothers," the investment firm whose 2008 collapse led to the global financial crisis.

Billionaire investor Warren Buffett told CNBC he doesn't think the federal government will fail to pay its bills, but "if it does happen, it's a pure act of idiocy."

Rep. Steve King, R-Iowa, a tea party favorite, said he was not worried about the prospect of a U.S. default.

"We are going to service our debt," he told CNN. "But I am concerned about all the rhetoric around this ....I'm concerned that it will scare the markets."

Aides to Reid and McConnell said the two men had resumed talks, including a Tuesday night conversation, and were hopeful about striking an agreement that could pass both houses.

It was expected to mirror a deal the leaders had neared Monday. That agreement was described as extending the debt limit through Feb. 7, immediately reopening the government fully and keeping agencies running until Jan. 15 — leaving lawmakers clashing over the same disputes in the near future.

It also set a mid-December deadline for bipartisan budget negotiators to report on efforts to reach compromise on longer-term issues like spending cuts. And it likely would require the Obama administration to certify that it can verify the income of people who qualify for federal subsidies for medical insurance under the 2010 health care law.

But that emerging Senate pact was put on hold Tuesday, an extraordinary day that highlighted how unruly rank-and-file House Republicans can be, even when the stakes are high. Facing solid Democratic opposition, Boehner tried in vain to write legislation that would satisfy GOP lawmakers, especially conservatives.

Boehner crafted two versions of the bill, but neither made it to a House vote because both faced certain defeat. Working against him was word during the day from the influential group Heritage Action for America that his legislation was not conservative enough — a worrisome threat for many GOP lawmakers whose biggest electoral fears are of primary challenges from the right.

The last of Boehner's two bills had the same dates as the emerging Senate plan on the debt limit andshutdown.

But it also blocked federal payments for the president, members of Congress and other officials to help pay for their health care coverage. And it prevented the Obama administration from shifting funds among different accounts — as past Treasury secretaries have done — to let the government keep paying bills briefly after the federal debt limit has been reached.

Boehner's inability to produce a bill that could pass his own chamber likely means he will have to let the House vote on a Senate compromise, even if that means it would pass with strong Democratic and weak GOP support. House Republican leaders have tried to avoid that scenario for fear that it would threaten their leadership, and some Republicans worried openly about that.

"Of all the damage to be done politically here, one of the greatest concerns I have is that somehow John Boehner gets compromised," said Sen. Lindsey Graham, R-S.C., a former House member and a Boehner supporter.

With the default clock ticking ever louder, it was possible the House might vote first on a plan produced by Senate leaders. For procedural reasons, that could speed the measure's trip through Congress by removing some parliamentary barriers Senate opponents might erect.

The strains of the confrontation were showing among GOP lawmakers.

"It's time to reopen the government and ensure we don't default on our debt," Rep. Jaime Herrera Beutler, R-Wash., said in a written statement. "I will not vote for poison pills that have no chance of passing the Senate or being signed into law."

Comments

meowmix

How about you looking up to see just exactly WHERE the money is being spent???? Defense budget is astronomical. The actual percentage of the budget that goes towards the poor is nothing in comparison!

Kramer

How bout this, I'll agree to cut defense by 20% if you agree to cut entitlement spending by 20%. If that were to happen we'd dang near have a balanced budget.

The Bizness

I would love to agree with that if you could show me a way to keep assistance away from people that abuse it yet still have easy access for people that need it.

Contango

Re: "keep assistance away from people that abuse it yet still have easy access for people that need it."

Proper management and oversight of the programs instead of "pay and chase."

'Course that would take a legion more of highly compensated bureaucrats in order to police it.

Why do you think that SSDI is soon set to go bankrupt? Flagrant waste, fraud and abuse.

http://articles.washingtonpost.c...

Here's JUST one for ya:

"Social Security judge accused of disability scheme"

http://www.caribbeanbusinesspr.c...

mikesee

Like that cut thing Kramer.

The Bizness

Social Security, and Medicare/Medicaid, are slightly more than Defense, but congress is too scare to tackle those.

The Hero Zone's picture
The Hero Zone

And it is disappointing that what you said is absolutely true. These are programs that require more attention than congress can give because it is so burdened with everything else it does.

mikesee

Bizness. I agree that the lawmakers are to scared to tackle this. I read an article months ago regarding disability in England and the fraud that went with it. Apparently, the gov't over there required all who were receiving disability to be re-evaluated. If I remember right about 38% of the people on disability no longer qualified. Just imagine if our gov't would do this!

Dr. Information

Now this is some good conversation without the constant 3-4 getting on here throwing random opinions out as facts and name calling.

Kramer

Ultimately the problem comes down to this, if you eliminate the frauds and wastes then you'll lose those people as voters. No good self-serving politician will do that except an evil tea bagger. Democrats don't really care if there is fraud and waste because those are just automatic Dem votes.

Dr. Information

Kramer, HOMERUN. When will both sides wake up and realize that the leaders only care about getting reelected. Thats it. They talk out their butt and make promises they can't keep.

The only reason the tea party was created was because there are more and more hard working people sick of the abuse, lies and down right laziness taking over this country. Why did they appeal to the conservatives? Because they are the party slightly similar to their beliefs.

Contango

Re: "if you eliminate the frauds and wastes then you'll lose those people as voters."

Currently a little over 50% of Americans receive some kind of money from DC be it SS, or welfare.

Once the Progressives get universal health care, no one will vote against his or her own self-interest and they will remain in power until bankruptcy (or which ever comes first).

H*ll, 60% of Medicaid spending is on nursing home care. Wait until the 78 million baby boomers land in 'em! They'll bankrupt this country.

Nursing home care costs currently are around $80K per yr.

https://www.metlife.com/mmi/rese...

Kramer

Exactly. It's Atlas Shrugged played out before our eyes. Either that or we end up split in to two countries.

Contango

Re: "split in to two countries."

When my family business is done here, I'm heading for TX.

Wanna be on the "right" side this time. :)

Let the Yankees tax, borrow, print and spend themselves to death.

The New World Czar

Same applies here, my cousin's willing to sell off the front 5 of his ranch. First Shiner Bock is on me.

Contango

Re: "First Shiner Bock is on me,"

Thanks.

I use it in my shrimp boil.

meowmix

Geez Contango-- you're really going to move to Texas??? Well then by golly I'm even more for that state being allowed to secede!

Contango

Re: "secede!"

Ain't gonna happen. But the jobs keep flowing there:

http://gmauthority.com/blog/2013...

GM's moving production from OH and MI to make it happen.

deertracker

Those minimum wage jobs keep flowing there! You left out that little detail!

Contango

In case any of you missed it:

"Federal Housing Administration to Take $1.7 Billion Subsidy"

http://www.bloomberg.com/news/20...

Did you know that the govt. hands out zero down payment home loans?

They take the manditory 3% down payment and roll it into the mortgage payment - voila! Zero down payment loans.

Yea, that scheme worked out well during the housing crisis didn't it?

Dr. Information

Man its scary that they didn't learn the first time.

thinkagain

So what are Progressives progressing towards? Total dependency on an overwhelmingly bloated government.

"if we can but prevent the government from wasting the labours of the people, under the pretense of taking care of them, they must become happy.” Thomas Jefferson

Contango

Re: "Total dependency on an overwhelmingly bloated government."

And it'll be like the joke in the defunct Soviet Union where everyone was an employee of the govt. :

They pretend to pay us and we pretend to work.

The evidence of our govt.'s bankrupt and corrupt fiscal situation will be laid bare during the next economic downturn and even the blind may see.

It may not be next yr., but many are predicting that 2015 will be the yr. when the SHTF.

deertracker

Please make sure you are in front of the fan in 2015!

be for real

Have everybody pay 15% including the rich.budget would balance

Dr. Information

The rich (top 10%) pay in yearly roughly 90% of the IRS's sent out bills. Which means the rest of this country needs to start pitching in 15% with no refunds. Amazing how people think the rich pay nothing. Amazing.

The Big Dog's back

The way you right wingnuts are talking, you're ready to raise your taxes to cover all the bills your generation ran up so your kids and grandkids won't have to pay for it. Congratulations, it's about time for you take responsibility for YOUR bills.

Contango

Re: "it's about time for you take responsibility for YOUR bills."

The "responsible" thing would be to allow your health care benefits to be taxed and don't allow your employer to deduct 'em.

Also eliminate state and local income and property tax deductions.

High tax states should pay their "fair share."

The Big Dog's back

I'll pay more taxes as soon as they tax stock transactions, and put the Capital Gains tax as income tax.

Dr. Information

Most people's capital gains tax is retirement money. I know you think everyone who invests is just filthy rich but that is not even close to being true.

Pages