Gridlocked lawmakers in the nation’s Capitol resolved their fiscal differences over the break by extending Washington’s borrowing power through May in a move that widened the gulf of inter-party GOP disputes.
The decision to lift the debt ceiling passed the U.S. House of Representatives by a vote of 285-144, allowing the government to borrow more than $16.4 trillion until May 19, when Congress will revisit the matter in another likely budget clash.
When the bill made it to the Senate on Jan. 31, it passed 64-34, with 50 Democrats, 12 Republicans, and two independents with “yes” votes. Voting “no” were one Democrat and 33 Republicans.
The measure, only four and a half pages long, was a temporary Band-Aid to give more time in an attempt to address more pressing problems such as government funding and automatic spending cuts.
The bill, poignantly called the No Budget, No Pay Act (H.R. 325), will delay paychecks to Congress members until a budget is passed.
Speaker of the House John Boehner, who spearheaded the bill, has taken the role of political liaison between the embittered parties, making his way between the White House and Capitol Hill in the days and weeks leading up to the “fiscal cliff” deadline on the last day of 2012.
“With the passage of this bill today, it’s pretty clear that we’re sending a message to the Democrat-controlled Senate: Do your job,” Boehner told reporters after the measure passed through the House.
Before the decision was made on Jan. 23, members of Congress heard experts in the field of economics pitch their varied points of view on the hot-button issue that was to affect everyone.
The Ways and Means Committee, the chief tax-writing committee in the House of Representatives, was at the center of the stage debating the debt ceiling trying to hash out a solution before any more time dragged on.
“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,” said G. William Hoagland, senior vice president of the Bipartisan Policy Center, in a statement to the committee in a hearing last Tuesday.
At the World Economic Forum in Davos, Switzerland, International Monetary Fund (IMF) Managing Director Christine Lagarde said the U.S. should consider its “leading role” in the global economy when making policy decisions.
“If they take the time to really sit down, rationally, sensibly, putting a little bit of their respective ideology on the side to really focus on what is good for the economy and what is going to be good for the rest of the world, that’s great,” she said.
Former IMF chief economist Simon Johnson told the Ways and Means Committee in the hearing that the U.S. government has never used its credit to pay back borrowers such as China even before the summer of 2011 when Congress passed and President Obama signed the Budget Control Act.
The Budget Control Act was drafted to use debt ceiling as a “vehicle to reduce the deficit,” according to Rep. Charles Rangel (D-NY), which he said he opposes.
“It was a big mistake in 2011 to create this degree of uncertainty and fear in the U.S. and around the world and it’s a big mistake to do it again today,” said Johnson.