Congress will need to address the debt limit by November 5th or risk a default on the nation’s debt. The deadline is the first the Obama administration has set for raising the $18.1 trillion debt limit, and comes in somewhat earlier than what most experts had predicted. The federal government reached its borrowing limit in March and has since been deploying “extraordinary measures” to free up room beneath that limit.
That new deadline has major implications for House Majority Leader Kevin McCarthy (R-CA), likely the next Speaker of the House (elections will take place October 8th to replace current Speaker John Boehner, who is retiring at the end of October). Congress will need to figure out how to increase the nation’s borrowing limit, prevent a government shutdown, and keep money flowing to highway projects – all in a 30 to 60 day period. And all three will fall on a House Republican Conference in flux, with a new speaker, majority leader, and majority whip expected to be elected next week but not take over until November.
The administration has repeatedly said it will not negotiate raising the debt limit, but congressional Republicans in the past have pressed for spending cuts in exchange for raising the debt ceiling. Prior to the deadline, there had been talk of tying the debt limit to budget talks. But the month-long gap between the debt-limit deadline (November 5th) and expiration of government funding (December 11th) complicates matters.
Here’s a selection or articles the Federal Relations Team is reading this week.
Lincoln (National Archives)
Whither Pell? – A new report released Thursday provides a detailed look at the graduation rates of low-income college students. At many colleges, low-income students graduate at much lower rates than their high-income peers. Read more at The Atlantic.
Chill in the Pacific – China and the US have not have the warmest relationship and President Xi’s recent visit to the country did not seem to warm the relationship. While focus on constructively engaging China has been a priority for decades, this attitude seems to be shifting to an attitude of competition. Read more at Politico.
Killed It Dead? – In his five years as Speaker, Boehner endured an adversarial President, Senate and internal party. Has the Speakership been irrevocably marginalized in an era of intense partisan factionalism? Or is Boehner’s resignation a weathervane for something else—a GOP establishment? Read more at Politico.
Little Loan, Big Issue – Community colleges are relatively affordable, and their students tend to borrow less than those who attend other types of institutions. Yet the debt students rack up at community colleges is troubling. The reason is that students who attend two-year colleges struggle to repay even small loans, and often default on them, a concern that is reinforced by a new study from one of the sector’s primary trade groups — the Association of Community College Trustees. Read more at Inside Higher Education.
Default Rates Going Down – The share of federal student loan borrowers who default on their debt within three years of entering repayment dropped for the second year in a row, the U.S. Department of Education announced Wednesday. The national default rate on student loans made by the government fell to 11.8 percent from 13.7 percent last year, the department said. Obama administration officials credited their success in getting more borrowers to sign up for income-based repayment plans for some of the decline in defaults. Read more at Inside Higher Education.
Five on the Horizon – The Supreme Court convenes its new session on Monday, October 5th. While court has already agreed to hear 34 cases, the docket is not yet totally set. There are five big cases on the horizon with sweeping implications on race and college admissions, the criminal justice system, public sector unions and, many experts expect, another rendezvous with ObamaCare. Read more at The Hill.
Bankruptcy – The Administration is calling on Congress to make it easier for some student loan borrowers to erase their debt through bankruptcy, as part of a package of proposals aimed at helping Americans who are struggling with loan payments. In a report released Thursday by the U.S. Department of Education, administration officials outlined a range of recommendations for improving the nation’s student loan system, most of which require congressional action. Read more at Inside Higher Education.
College Athletic$ – A court just affirmed that the NCAA may restrict colleges from compensating athletes beyond the cost of attendance. A three-judge panel of the United States Court of Appeals for the Ninth Circuit ruled Wednesday in an apparent victory for the college sports establishment as it fights efforts to expand athletes’ rights. Read more at the New York Times.
Gore – The Smithsonian closed its popular dinosaur hall at the Natural History Museum several years ago for a total makeover. Today, the Smithsonian revealed the new central exhibit to the hall, which is of a T-Rex killing a triceratops. It looks pretty badass. Check it out if your in DC in 2019. See more at the Smithsonian Magazine and the Washington Post.
Despite efforts of Senators Tammy Balwin (D-WI) and Patty Murray (D-WA), the Senate was unable to take up the House-passed measure to extend the Perkins program. After the House moved quickly this week to extend Perkins loans and send a measure to the Senate, the two Senate champions attempted to have the Senate quickly consider and pass the measure via a legislative procedure called a Unanimous Consent request. To be considered in this manner, no Senator must object, and HELP Committee Chairman Lamar Alexander (R-TN) did object effectively killing the program, which expired September 30th.
The Senate could still take up the House extension bill that failed to get unanimous consent Wednesday, or Higher Education Act reauthorization could allow for a more permanent reinstatement of a program.
With the passage of a continuing resolution late last night, the federal government is open for business on this first day of FY2016! The threat of shutdown diminished greatly last Friday when House Speaker John Boehner (R-OH) announced his retirement effective October 30, 2015.
The CR will fund federal through December 11 and includes $1.017 trillion in annualized spending, which is roughly equal to the FY2015 level (most programs would be funded under the CR at a rate 0.21 percent lower than enacted FY2015 levels). The CR would continue to fund Planned Parenthood and also provide $700 million in emergency dollars to fight Western wildfires. It would also renew expiring authorizations for the E-Verify program and the so-called Internet Tax Freedom Act (PL 105-277).
So, what happens between now and December 11? There are many possible outcomes for FY2016 appropriations. In the best case scenario, Congress could effectively negotiate a budget deal – similar to the 2013 Murray-Ryan deal – which would lift the budget caps for both defense and non-defense discretionary spending and remove the ongoing threat of sequester. This would pave the way for advancing spending bills (or an omnibus bill) before the December 11th deadline. If a budget deal is slow to materialize, then we could see another short term CR to give Congress more time to negotiate this deal. If budget negotiations fail, we could see the threat of shutdown reemerge or Congress could agree to a yearlong CR at FY2015 levels.
Early signs indicate that a budget deal is possible. Senate Majority Leader Mitch McConnell (R-KY) has already initiated preliminary discussions with President Obama and Speaker Boehner on a possible deal. Additionally, Democratic staff said this week that they are already beginning to set new topline numbers and identify possible offsets.
The Office of Federal Relations will continue to monitor and report on progress.
House Republicans will hold elections for new leaders on Oct 8 in a closed door session. It is expected to be a contentious meeting and election, with multiple candidates vying for each position as the House GOP conference struggles to maintain political strength after Speaker John Boehner’s surprise retirement announcement last week.
Majority Leader Kevin McCarthy (R-CA) is expected to win the speakers gavel. He’s running against Florida Republican Rep. Daniel Webster who unsuccessfully tried to beat Boehner in the speaker election earlier this year.
If McCarthy wins that opens the door for a majority leader election. Reps. Tom Price (R-GA) and Steve Scalise (R-LA), who is the current Majority Whip, are both vying for that post.
If Scalise wins, there will also be a race for Majority Whip.
