August 29, 2014

Debt Limit Suspended as Budget Debates Continue

  • The national debt has grown significantly in recent years due to rising annual deficits. A deficit occurs in any year the government spends more...

President Obama signed legislation this week to suspend the federal debt limit until mid-May as Democrats and Republicans continued to debate a range of budget issues. The Senate approved the debt limit legislation on a 64-34 vote last Thursday that followed House approval the previous week.

The legislation – developed by House Republicans – suspends the debt limit until May 18 and then automatically raises it to accommodate any additional borrowing up to that point. It also calls for withholding pay from members of Congress if their chamber fails to pass a budget blueprint by April 15.

The Concord Coalition has urged elected officials to reform the ineffective debt limit process. Concord said the decision to suspend the debt limit until May was a constructive shift away from default threats and towards the need for Congress to quickly approve responsible budget plans.

Concord this week also praised efforts by a bipartisan group in the House to encourage a long-term budget plan based on the principles of the 2010 National Commission on Fiscal Responsibility and Reform (Simpson-Bowles). In a vote today, 75 House members from both parties showed the courage to support a legislative amendment sponsored by Representatives Kurt Schrader (D-Ore.), Frank R. Wolf (R-Va.), Jim Cooper (D-Tenn.) and Chris Gibson (R-N.Y.)

“This is a simple idea with a powerful message,” said Robert L. Bixby, Concord’s executive director. Unless compromises can be struck across party lines, he said, “there is little hope of enacting the kind of comprehensive long-term plan we need.”

Lawmakers in both parties have promised to pass budget resolutions for the coming fiscal year. In addition, Congress must decide what to do about the Continuing Resolution that is funding the government this year but expires on March 27 -- an issue where partisan differences could lead to a government shutdown.

Lawmakers are also considering possible action on the “automatic” spending reductions that resulted from 2011 legislation on the debt limit. These cuts were supposed to take effect in January but were delayed for two months.

On Tuesday Obama suggested that if a big budget deal could not be reached immediately, Congress should at least quickly pass a smaller alternative package of spending cuts and revenue-raising tax reforms to avoid the automatic cuts.

Also this week, the President missed the statutory deadline to submit his FY 2014 budget. In a letter last month to House Budget Committee Chairman Paul Ryan, OMB Deputy Director Jeffrey Zients cited the “protracted ‘fiscal cliff’ negotiations” as one reason for the delay.