WASHINGTON – House leaders on Monday unveiled legislation to permit the government to continue borrowing money through May 18 in order to stave off a first-ever default on U.S. obligations. It is slated for a vote on Wednesday.
The measure marks a change in strategy for House Republicans, who have backed off demands that any extension of the government’s borrowing authority be accompanied by stiff spending cuts.
The legislation is also aimed at prodding Senate Democrats to pass a budget after almost four years of failing to do so. It would withhold the pay of lawmakers in either House or Senate if their chamber fails to pass a budget this year. House Republicans have passed budgets for two consecutive years, but the Senate hasn’t passed one since President Obama’s first year in office.
The current debt limit is $16.4 trillion. The legislation does not set a specific limit; rather it would automatically increase the limit by the amount required to fund U.S. government obligations through May 18.
But that date is not a hard deadline, because the Treasury would retain the limited ability to exercise so-called extraordinary measures and juggle certain accounts to buy limited additional time before a default on U.S. obligations. Such steps could buy several additional weeks beyond May 18.
The measure also contains a “no budget, no pay” provision that withholds pay for lawmakers if the chamber in which they serve fails to pass a congressional budget resolution by April 15. That’s a provision designed to press the Senate to pass a budget.
On Sunday, Sen. Chuck Schumer, D-N.Y., said the Senate would do just that and would use it to call for follow-up legislation that would increase revenues.
Under Congress’ arcane budget procedures, a congressional budget resolution is a nonbinding measure that tries to set parameters for future legislation setting agency budgets and curbing federal benefit programs like Medicare.
Democrats have generally reacted coolly to the three-month extension, which would take the debt limit issue off the table for several months but leave other choke points in place, including sharp, across-the-board spending cuts that would start to strike the Pentagon and domestic programs alike on March 1 and the possibility of a partial government shutdown with the expiration of a temporary budget measure on March 27.
But failing to meet those deadlines would have far less serious consequences than defaulting on U.S. obligations like payments to bondholders.
If the debt cap is not raised, the government would default on its obligations by as early as Feb. 15, Treasury says.