Posted on January 23, 2013 by Jean
Published: 23 January, 2013, 21:05
The opening session of the 113th US House of Representatives at the US Capitol in Washington. (AFP Photo / Saul Loeb)
The House voted on legislation Wednesday that will raise the debt
ceiling for three months and delay a US default. Even though this is
just a short term fix, the Obama administration said it supports it.
The legislation prevented a devastating default of US debt and
payments next month and instead give Congress three more months to come
up with an agreement on the budget, taxes, spending and the deficit. The
move would cause the congressional budget battles to once again take
place – but this time in March.
The legislation contains a “no budget, no pay” segment that ensures
both House and Senate members will no longer receive their paychecks if a
budget isn’t agreed upon by April 15, putting further pressure on
legislators to come up with a plan. Although President Obama prefers a
long-term solution and said incremental increases in the debt ceiling
ultimately harm the economy, continued disagreement in Congress has
prompted him to support the extension. While House Democrats appear
widely opposed to the measure, Senate Democrats are reluctantly
supporting it, AP reports.
The March talks will come at a time when automatic spending cuts are
set to go into effect and severely affect the Pentagon budget. The
military would face a 30 percent reduction in operating costs for Army
posts, while the Pentagon would have to determine how it could come to
terms with $500 billion in cuts over the next decade.
“The fiscal situation and outlook are serious. Our funding is in
doubt as we support forward-deployed troops, those training and Wounded
Warriors,” wrote Army Secretaries John McHugh and Gen. Raymond Odierno in a letter to commanders.
The automatic cuts would trim $85 billion from the 2013 budget, which
the GOP plans to re-sequester during the next budget battle. Members of
Congress who oppose the spending cuts will be forced to come up with an
agreement on how to replace them, if they want to come up with an
agreement on the deficit. A battle on raising taxes will likely ensue.
“We feel by moving the issue of raising the debt ceiling behind
the sequestration … that we reorder things in a way that Democrats will
have to work with,” Rep. John Fleming, R-La., told AP. “The
cuts are the kind of cuts we want, they’re just not in the places we
want. But they’re also not in the places that the Democrats want. So
hopefully they’ll be forced to come to the table and work with us on a
bipartisan basis to put them where they need to be, where it has the
The three-month extension allows Congress to prolong talks about the
$16.4 trillion deficit and it has caused stock markets to trade
cautiously on Wednesday. By midafternoon in Europe, stock indexes were
lacking momentum and Wall Street opened with equally little momentum, as
the markets were awaiting the vote in Congress.
The credit agency Fitch Ratings said this
month that it would consider downgrading America’s credit score if
there is any sort of delay in coming up with a budget plan to raise the
debt ceiling by March 1. The agency has not commented on Wednesday’s
vote, but the move might prompt it to lower the US credit rating,
thereby lowering international trust in US borrowing.
With the economy depending on the decision that lawmakers will be
forced to come up with to avoid a default, the uncertainty about the US
economic future has once again been prolonged with the extension as
partisanship continues to rage through Congress.
“The sequester is arbitrary, but the fact is that when the
sequester goes into effect… it will have a pretty dramatic effect of
people’s attitudes here in Washington, and they may get serious about
cuts to the mandatory side of the spending equation,” said Speaker of the House John Boehner.
Thanks to: http://jhaines6.wordpress.com
NOTE!: This is not good news for an RV folks... not good at all!!!