The U.S. House of Representatives today approved legislation that lifts the debt ceiling and allows the Treasury Department to borrow more money. The bill postpones the day of decision from sometime next month until about mid-May.
The House vote was 285 ‘for’ and 144 ‘against’, with Republicans carrying most of the load for passage. The so-called ‘No Budget. No Pay Act’ pushes out the Treasury’s borrowing authority until May 18th, at which point the ceiling would be restored to its current level of $16.394 trillion plus the borrowing between now and that date. At that point, unless the ceiling is permanently lifted, the Treasury would once again be forced to take extraordinary measures to extend the ceiling in order to avoid a default on U.S. debt.
The bill requires the House and Senate to agree to a fiscal year 2014 budget resolution by April 15th or legislators’ paychecks will be withheld until a resolution is passed or this Congressional session ends in January 2015.
The bill is generally agreed to be a concession by House Republicans that forcing the debt ceiling issue and driving the U.S. to default on its sovereign debt is a losing political strategy.
Now, the House and Senate are faced with a March 1st deadline to reach a budget resolution or the sequester will trigger $1 trillion dollars in budget cuts for fiscal 2013. And if the Congress takes no action by March 27th, the government will shut down. Same as it ever was.