Worries over a looming debt limit crisis have eased as the result of a House vote to suspend the limit until May 18 and then automatically raise it to accommodate any additional borrowing up to that point.
The GOP plan, approved last Wednesday on a 285-144 vote, was a departure from House Republicans’ previous insistence that a debt limit increase would have to be accompanied by an equal amount of cuts in spending. The Senate is expected to approve the new legislation this week, and President Obama has indicated he does not oppose it.
The legislation also calls for withholding pay from members of Congress if their chamber fails to pass a budget blueprint by April 15.
Concord Coalition Executive Director Robert L. Bixby has called the Republican plan “a constructive shift of focus away from threats of default and towards the need for a budget.” Concord has also urged elected officials to reform the debt limit process, which has proven to be ineffective.
A day before the vote, the House Ways and Means Committee heard testimony on debt limit issues.
William Hoagland, senior vice president of the Bipartisan Policy Center, offered a timely warning: “We at BPC strongly believe that the imbalance in our federal ledger does need to be addressed. Prolonged negotiation over the debt limit, however, has the potential for substantial downsides to our economy – increased uncertainty, instability in the markets, disruption to individual and families’ lives – and our standing in the world as having the currency of choice.”
Simon Johnson, a professor at the Massachusetts Institute of Technology, expressed well-founded concerns as well: “Repeating a showdown over the debt ceiling every three to six months is sure to prolong the agony of the economic recovery. In fact, this would be one of the worst possible economic policies imaginable.”
J.D. Foster, a senior fellow at the Heritage Foundation, stressed the need for changes in Social Security and Medicare. Lee Casey, a partner at the law firm BakerHostetler, disagreed with the theory that the 14th Amendment gives the President constitutional authority to raise federal debt without congressional approval.