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

There you go again

This is no time to celebrate. Nothing was really accomplished except the proverbial "kick the can down the road." I mean, it adds a requirement to verify income before receiving Obamacare. Who's lamebrain idea was it to LEAVE IT OUT in the first place! Pathetic...

yeswee's picture
yeswee

Start working at home with Google! Its by-far the best job Ive had. Last Wednesday I got a brand new BMW since getting a check for $6474. I began this 8-months ago and immediately was bringing home at least $77 per hour. Useful Reference http://ow.ly/pAu07
WORK LESS EARN MORE

meowmix

Well Cruz, hope you enjoyed your 15 minutes--now, back you go to obscurity and since you're headed that way, take Palin with you.

Contango

Re: "Well Cruz,"

Don’t believe that you’ve heard the last of him.

Enjoy your brief celebration.

If you ran your household finances like the govt. operates it's fiscal house, you would have declared bankruptcy long ago.

About the only thing that it can do that you can't is print money.

abigbear

Contango
re:"well Cruz"
they dont run a household they use the working peoples money and empty wal-marts shelves

deertracker

Cya Cruz, wouldn't wanna be ya

Contango

Re: "Cruz,"

Don't worry your little Obamabot head.

He's in office until Jan. 2019.

rezzy

Meowmix? Really? Enough said

Darwin's choice

Cruz/Palin 2016

meowmix

I'm with you! A pure Democrat dream team! lolololol

Donegan

Now they can get back to paying the non-essential personel that do nothing other than pad the unemployment rolls and waste more money we do not have!

Kramer

This country is a joke. So people that stand up and say enough is enough with running up debt and spending us into bankruptcy are labeled arsonists and terrorists and are blamed for the government shutting down. I think I get it.

donutshopguy

Hope my kids and grandkids are ready for the future. Lets just pass on this enormous debt to the next generation. How's that for taking responsibility ?

mikesee

Kramer you are right! The democraps are leading this country down the highway to he11. They do not care whether or not our country can repay it's debts.

I encourage every working american to quit their jobs today and enroll in the gov'ts freebie handout programs! Why work hard for something when you can sit at home on your lazy a$$ and get free money from the gov't for food, healthcare, monies for utilities and housing? You can then use whatever cash you have or make from selling your foodstamp food for smokes, beer, iphones, hair extensions, nail jobs and drugs.

This country is becoming so f'd up.

The Bizness

I do not think that democrats want to give out freebies to people that don't need them, they want to have programs in place for people that are having a hard time.

That being said, I voted for Obama in the previous two elections, but am more of a moderate (except on environmental issues, there I am very liberal) and I think that we should run a balanced budget, and reform social programs, and tax codes.

I think if we didn't need the stimulous package - and the resulting anger from the tea party because of it - that we would have a functioning government that could meet half way and have a balanced budget by now. The tea party has gotten in the way of meeting in the middle for the last 4 years, and that is the reason we are in the mess we are in. If we could cut spending, and raise taxes we would be better off. Instead we cut spending, but did nothing on revenue. Our deficit, is currently shrinking, and spending has dropped since President Bush left office.

More work is left to do but to say the democrats are alone in the blame for this is insane.

meowmix

Bizness, my comment below was not directed towards you. It was a matter of who hit "enter" first. I agree with you!

Contango

Re: "Our deficit, is currently shrinking,"

Govt. figures lie, and govt. liars figure.

A more accurate barometer is the debt-to-GDP ratio.

"The percentage of debt is higher than any point since around World War II, and twice the percentage it was at the end of 2007,"

http://www.marketwatch.com/story...

Contango

Re: "If we could cut spending, and raise taxes we would be better off."

Entitlement non-discretionary spending would have to be cut exponentially and taxes would have to be raised astronomically on EVERYONE in order to balance our country's fiscal mess.

The last balanced federal budget was during the Eisenhower Admin.

http://taxvox.taxpolicycenter.or...

The Bizness

A 17-18% flat tax rate would balance the budget

Contango

Re: "A 17-18% flat tax rate,"

Dream on. The Dems like progressive income tax rates. Ain't gonna happen.

Dr. Information

A flat tax would be awesome but it wont happen because the Dems will cry its not fair for the middle of the class and lower to have to pay taxes. Heck, most of them get refunds and don't pay taxes at all. What kind of government do we have were we give out refunds when someone doesn't pay a single dime in taxes? The answer. A crooked one.

I agree, its both parties fault, but the Democratic leadership want to take non of the blame, hence constantly blaming Bush and everyone else even though they are the ones in charge.

A balanced budget you say, well dream on kiddo. It won't happen for one reason. It would require major changes in the way we run this country and the left wont allow that.

mikesee

Nice try Bizness but you are so wrong about "Our deficit, is currently shrinking, and spending has dropped since President Bush left office"!!

Consider the following regarding our debt under the Obama administration (info from factcheck.org):

1. As of Oct. 4, the amount the Treasury owed to the public was just under $11.94 trillion, an increase of 89.3 percent since the day Obama first became president.

2. Critics of federal debt levels often cite another, larger figure for total federal debt, which includes money the federal government owes to itself through such devices as the Social Security and Medicare trust funds. That total debt figure stood at just under $16.75 trillion on Oct. 4. That’s an increase of 57.6 percent since Obama was first sworn in.

3. However, the Obama administration recently projected an annual deficit of $750 billion in the fiscal year that began Oct. 1, and $626 billion the year after. At that rate, the debt owed to the public will more than double during the Obama presidency.

Did you notice the word "increase" in the first 2 and double in the 3rd?

Not one of the 3 examples bode well for Obama, democrats or taxpayers. Not only is our gov't spending more this year it is coming off of projections for record breaking dollar amounts of taxes being paid/collected.

The problem (dem + gop) is that for 55 of the last 60 years our gov't has spent more than it has collected! There is NO person or business that could survive with that statistic.

The Bizness

http://mobile.businessweek.com/a...

Debt and deficit are different. If you read my comments you will see I want a balanced budget, but to act like the democrats are solely to blame is crazy. We need reforms.

mikesee

If you noticed I threw a bone to both the dems & gop.

If you really look at the definition of debt and deficit you will notice that there is not really much difference. But one first must have a deficit (deficiency) to have a debt (something owed). Either way you look at it the gov't is screwing the crap out of the taxpayers with the out of control spending which has been ramped up during Obama's tenure.

The Hero Zone's picture
The Hero Zone

The Bizness, I may not agree with some aspects of your posts all the time but I will tell you that I wish there were more people who posted like you coming from a moderate/liberal standpoint. Your posts challenge me to think and understand things instead of feeling like an inferior, generally-conservative (maybe not on traditional social issues) know-nothing. I respect that, and you, even on the points where we may differ. Thank you. If I could give you a "Like" I would.

meowmix

There is something wrong with you. With the exception of 2 1/2 years when I stayed home to care for my newborn (while my husband worked I might add) I have worked my entire life from the time I was age 19. The foolish people who think the democratic party consists of soley people who receive public assistance are just that--foolish. Why don't you throw out your broken record and say something intelligent for a change.

mikesee

Here you go meowmix. How do we fix a $16.7 trillion dollar deficit with more people than ever not working and our gov't giving out more dollars than ever in entitlements? There is your intelligent question for the day hopefully you can give me an intelligent answer.

Kramer

That's all well and good but aside from the "let's all help each other good vibes", the fact remains that we're on the brink of financial collapse. There is no money left. When 10% of the population "needed" assistance we could still float. When 50% of the population "needs" assistance we're sunk. The laws of economics and physics do not care about your well intentioned programs.

deertracker

It is a well known fact that red states receive the most gov't assistance!

http://www.policymic.com/article...

abigbear

becoming has passed it is already

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