Tension eases for the moment, but contention remains.
By : GREG OLIVER
Global investors watch America anxiously. In late December, the U.S. technically reached its debt ceiling of approximately $16.4 trillion, with the federal government taking what Treasury Secretary Timothy Geithner called “extraordinary measures” to avert a default.1
Even as House GOP leaders announced plans Friday to approve a three-month increase in the federal debt limit, tension remains – and that tension could provoke a debt ceiling battle on Capitol Hill reminiscent of the impasse of 2011 later this year.2
President Obama has again presented a debt ceiling hike as an essential move needed to pay America’s bills. House Republicans do not want to see a long-term increase in the debt limit without corresponding spending cuts, and some conservatives have characterized the Obama administration’s warnings as more posturing than fact.
A new plan to deal with critical fiscal deadlines. Sometime between February 15 and March 15, the federal government’s borrowing capacity will (in theory) be exhausted. March 1 now represents the start of the “sequester” – the automatic spending cuts detailed in the 2011 deficit accord. On March 27, a six-month measure passed to fund federal government operations expires.3
Last week, House Majority Leader Eric Cantor (R-VA) unveiled a plan for a three-month extension of
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As of today : Republican-controlled House votes in favor of a short-term debt ceiling fix that would extend the country’s borrowing authority until May, while compelling Congress to pass a budget or have their pay suspended.
Citations. GREG OLIVER 8073r08749017451947519045714
1 – www.latimes.com/business/money/la-fi-mo-debt-limit-geithner-treasury-boehner-obama-20130114,0,5318272.story [1/13/13]
2 – www.latimes.com/news/politics/la-pn-house-leaders-debt-increase-20130118,0,4453098.story [1/18/13]
3 – www.reuters.com/article/2013/01/17/us-usa-fiscal-ryan-idUSBRE90G13520130117 [1/17/13]
4 – www.cnbc.com/id/100381526 [1/15/13]
5 – www.cnbc.com/id/100377700 [1/14/13]
6 – www.ocregister.com/opinion/debt-383518-payments-government.html [1/16/13]
7 – thehill.com/homenews/house/275663-pelosi-urges-use-of-14th-amendment-to-avoid-debt-ceiling-crisis [1/4/13]
8 – www.nytimes.com/roomfordebate/2013/01/13/proposing-the-unprecedented-to-avoid-default/platinum-coin-would-create-a-trillion-dollar-in-funds [1/13/13]