Shutdown & Debt Limit: Two Chambers, Two Competing Proposals

Posted on October 15, 2013

While discussions are happening and proposals are beginning to take shape, there still is not a clear solution that will reopen the government or raise the debt ceiling before we hit the current limit on Thursday.

Senate leaders have been negotiating a deal for the past couple of days and appeared to be somewhat close to bringing it to the floor for a vote. Harry Reid described Tuesday as a “bright day”. That process and optimism was abruptly halted today when the House GOP announced that they were introducing their own plan to reopen the government and raise the debt ceiling. Not surprisingly, the House and Senate plans are rumored to differ in some key ways which offers challenges in finding common ground with both chambers and getting something passed in the next 36 hours.

The Senate bill is thought to contain a short term plan to reopen the government and extend the debt limit while forcing bipartisan talks for a longer term solution. The House legislation includes a similar plan, but also tacks on certain Obamacare related provisions. The Senate has put their talks on hold to see what the House does next – although democrats and the White House have already openly dismissed the GOP plan. House Republicans are expected to bring their bill to the floor sometime this evening, although the latest news is that they are having trouble finding the votes in the their own part to pass the bill.

Shutdown Day 14: Days Before Debt Limit Deadline and No Deal in Sight

Posted on October 14, 2013

Senate leaders Harry Reid (D-NV) and Mitch McConnell (R-KY) continued negotiations over the weekend – searching for a deal that would raise the debt limit and reopen the government, but emerged with no deal in sight yet. A bipartisan group of 12 Senators are also currently in-closed door meetings this morning trying to work out the parameters of an agreement.

Some details about a potential plan from the Senate have emerged:

Funding to run the government for 6 months
Extend debt limit until Jan. 31, 2014
Delay of the medical-device tax for 2 years
More leeway provided to federal agencies to implement sequester cuts
Mandate House-Senate budget talks

The sticking points right now seem to be the exact length of any extension of government funding or a debt ceiling increase, and FY14 spending levels. Democrats have indicated that they are willing to accept the $986 billion first-year sequester cap that was previously agreed upon, while Republicans are pushing for a cut in government spending a cap of $967 billion to be put in place in January.

While no concrete deal has been released, there seems to be a bit more optimism emerging from both parties. However, even if the Senate can agree on a bipartisan deal, it is unclear what the reaction would be by the House. Boehner would have a few options – pass a House deal that would need to go to the Senate for unlikely approval, pass the Senate bill which would be a clear defeat for the House GOP, or amend and pass a version of the Senate bill with addition terms.

Shutdown: Day 12 and Progress!

Posted on October 12, 2013

Congressional leaders continue to work toward reopening government and extend the debt limit before the October 27^th deadline. While details are vague, it appears that the proposal would immediately end the shutdown and fund federal agencies for six months at current spending levels. It would maintain the automatic cuts, or sequester, but give agency officials more flexibility to decide where the cuts should fall rather than just mandating across-the-board cuts (although some agencies may ultimately decide to implement some uniform reductions). In addition, the proposal would raise the debt limit through January 31, 2014.

It is unclear at this point whether the proposal will also include directions to House and Senate budget committees to immediately enter negotiations over broader budget issues and to issue a report by January 15, 2014. If an agreement could be reached, it would clear a path for another increase in the debt limit later that month, without additional drama.

In exchange, Republicans may seek minor adjustments to health care reform. The first would delay for two years a 2.3 percent tax on medical devices that is unpopular in both parties. The second would require internal auditors to ensure that people who get tax subsidies to buy health insurance are in fact eligible.

House GOP leaders are meeting this morning to discuss their options. Both chambers are scheduled to meet today and could possible begin moving a compromise proposal forward to end the current fiscal crisis.

Shutdown: Day Eleven Brings a Glimmer of Hope

Posted on October 11, 2013

Negotiations to end the government shutdown and raise the debt limit continued into the night Thursday after House Republicans and President Obama failed to reach an agreement on ending the fiscal standoff during a White House meeting earlier in the day. The GOP favors a temporary increase in the debt ceiling through November 22^nd but would require an agreement from Democrats to negotiate on a broader deal that could include tax and entitlement reforms. They could add in a provision to also reopen government but that is not clear yet. Meanwhile, a plan by Senator Susan Collins (R-ME) would do both and also repeal or delay the health care law’s medical device tax and give federal agencies flexibility to deal with the decade-long automatic spending cuts under sequestration during the next two years. In addition to that proposal, Senate Majority Leader Harry Reid (D-NV) will bring up a bill that would just raise the debt limit, possibly requiring vote on Saturday.

Shutdown: Day Ten

Posted on October 10, 2013

Lawmakers made no visible progress Wednesday on a stopgap spending bill to reopen federal government with the Senate once again rejecting piecemeal funding bills favored by the House. The funding impasse has kept the government shut down since the new federal fiscal year began October 1^st.

The focus today is on a White House meeting between President Obama and House Republican leaders aimed at trying to find an opening for ending the shutdown. One proposal from House Budget Chairman Paul Ryan (R-WI) will certainly be part of the discussion. Ryan’s plan calls for a six-week, $118 billion debt limit increase with dollar-for-dollar budget cuts. Before the increase is approved, however, both the House and Senate would have to agree to overhaul the tax code and entitlement programs during those six weeks and pass them, along with a long-term debt limit increase, when the six-week period expires. Finally, it would have some enforcing trigger, although the specifics were not announced, nor were the specifics of the cuts Ryan is seeking. It appears to be a similar proposal to previous ones that the Democrats have already rejected and it doesn’t specifically address the government shutdown. But it does signal that the GOP has finally shifted away from defunding the health reform law to broader fiscal issues.

The Ryan proposal seems to a starting point for discussions that will take place with President Obama today, but the ultimate outcome is still uncertain. Even if everyone comes to some agreement to this short-term debt limit increase in exchange for reopening government, it seems unlikely that lawmakers can resolved their differences on tax and entitlement issues in just six weeks. And if the “enforcing trigger” is anything like what happened with sequestration, then we may be facing more pain before this is all over.