US debt limit bill gives political cover to both parties

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US debt limit bill gives political cover to both parties. (Reuters) US debt limit bill gives political cover to both parties. (Reuters)
SummaryPrevious budget dramas in Washington produced bargains that made it look like Congress was making great strides, without actually doing so.

Previous budget dramas in Washington produced bargains that made it look like Congress was making great strides, without actually doing so.

Wednesday's vote by the Republican-controlled U.S. House of Representatives to extend the government's borrowing power until May 19 was no different.

It temporarily removed a hazard - a potential default within the next month - that only existed because Republicans created it. They initiated Wednesday's vote after taking a beating in public opinion polls for engaging in budget brinkmanship over the "fiscal cliff," a series of budget deadlines that came together at the end of 2012, which could have resulted in huge tax increases and spending cuts had Congress not acted to either eliminate or postpone most of them.

While House Speaker John Boehner advertised the vote as the "first step" toward a balanced budget that puts the onus on Democrats to address the deficit. But the House-passed bill does not contain measures that are guaranteed to bring about deficit reduction.

The bill did not: cut government spending; extract commitments from President Barack Obama or Democrats in the U.S. Senate to cut government spending; or avoid three potentially jarring fiscal confrontations a few months down the road.

Automatic budget cuts postponed from the fiscal cliff around New Year's Day kick in on March 1. A bill that temporarily funded the government will expire on March 27, threatening a potential shutdown of some federal operations. In May, the borrowing authority approved on Wednesday will run out.

While Republicans say each of these will present an opportunity for them to engage Democrats, including Obama, in deficit reduction negotiations, their track record is not promising.

"I don't think it (the House debt limit bill) has much to do with deficit reduction at all," said Robert Bixby, executive director of the non-partisan Concord Coalition, a budget reform advocacy group. "It's a way of defusing a political crisis."

"Our base case remains a series of endless cliffs," Chris Krueger of the financial services firm Guggenheim Partners wrote in a note. "Short-term extensions of these cliffs could result in an endless game of kick the can - until the can kicks back."

As for deficit reduction, he wrote: "Don't hold your breath, though hope springs eternal."

Ethan Harris of Bank of America Merrill Lynch said, "It is another example of where politicians' bark seems worse than their bite."

Welcome to the latest chapter in a two-year battle between Obama and congressional Republicans over how the

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