Budget Plans and Debt Limits

Only hours after I published the post about the government shut down, the House passed its budget plan. This came as a surprise for two reasons, the first because I didn’t think the House would ever pass any sort of budget until the last minute, and the second because I honestly did not realize the House did anything on a Friday.

So what exactly did the House pass? It’s a bill that outlining how much the government will spend in the coming fiscal year, but it also includes a provision to defund Obamacare. The bill passed the House 230-189, along party lines.[1] While the bill passed in the House, it is very unlikely that it will pass the Senate unchanged, as the Senate is controlled by Democrats. Most people think that the Senate will pass a similar version of the bill, but include spending for Obamacare, and send it back to the House. However, given how slowly the Senate can move, it is likely that the bill will be sent back to the House right before the shutdown deadline of October 1^st.[2] It’s likely that a decision on a budget will come down to the wire.

And even if a budget is passed on time, and the government does not shut down, our country is not out of the woods. In a few weeks, the United States will hit our debt ceiling, and unless Congress raises the debt ceiling, the nation will default on our debts.[3] Both President Obama and Speaker of the House John Boehner refuse to negotiate, with the President agreeing to nothing but raising the debt ceiling, and the Speaker unwilling to do that.

A shutdown would be harmful to our country, but defaulting on our debts would be worse, and people in the country and around the world would lose faith in our “Treasury debt, widely seen as the safest investment possible.”[4] Failing to raise the debt limit could put the country in another economic crisis, similar to the recession we are still climbing out of.[5] The debt limit has been raised 78 times since 1960, and 49 of those have been under Republican presidents.[6] Raising the debt limit, while not a sustainable solution to the growing problem of our national debt, is currently the best option. For the time being, not raising the debt limit would cause more trouble than the debt would.

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[1] http://www.nytimes.com/2013/09/21/us/politics/house-spending-bill.html?_r=0

[2] http://www.cbsnews.com/8301-18563_162-57603988/house-sets-stage-for-budget-standoff-with-government-funding-vote/

[3] http://www.washingtonpost.com/politics/house-passes-gop-spending-plan-that-defunds-obamacare/2013/09/20/4019117c-21fe-11e3-b73c-aab60bf735d0_story.html

[4] http://www.nytimes.com/2013/09/21/us/politics/house-spending-bill.html?pagewanted=2&_r=0

[5] http://www.treasury.gov/initiatives/pages/debtlimit.aspx

[6] http://www.treasury.gov/initiatives/pages/debtlimit.aspx