Debt Ceiling Bill Passes, and Congress Votes to Pay Themselves



The House of Representatives passed a plan to extend the debt ceiling deadline by an additional 3 months in a 285-144 vote on Wednesday.

If the bill passes the Democratic-controlled Senate, the bill will prevent (at least temporarily) another major congressional standoff on the debt ceiling, such as the 2011 battle which nearly led to a federal government shutdown. The legislation extends the debt ceiling by 3 months, in exchange for a mandatory escrow on Congressional salaries if each house of Congress fails to produce a 2014 budget by April 15. Republicans believe that the extension will give them the political leverage necessary to pass major budget cuts, mainly from entitlement programs and discretionary spending.

Both the White House and Senate Democratic leaders say they will support the legislation, meaning it is nearly certain to become law.

Writes the Washington Post:

“About an hour before the House's expected passage of the new plan, Senate Majority Leader Harry M. Reid (D-Nev.) and his leadership team formally said that they would accept the latest offering from House Speaker John A. Boehner, R-Ohio, in large part because Boehner had dropped his previous demands that every dollar in increased borrowing authority be met with a corresponding dollar in spending cuts.”

An odd moment of bipartisanship, beginning what will undoubtedly be a very strange year in Washington. Just weeks ago, the outbound 112th Congress was locked in a death battle over the imminent fiscal cliff, a fight that appeared to exhaust both conservatives and liberals and may have sapped their will for further brinkmanship.


Congressional Republicans have proposed a new bill to deal with the debt ceiling, and surprisingly, it’s an extremely moderate piece of legislation that does not demand immediate spending cuts or budgetary reform. Instead, it threatens to withhold pay for the nation’s legislators if they fail to pass a federal budget by April 15.

The House of Representatives prepared on Tuesday to debate and vote on a GOP-sponsored bill Wednesday that would allow the federal government to accrue more debt — raising the debt ceiling for approximately three months.

Submitted to the House clerk at the end of session on Tuesday, H.R. 325 will be closed to amendments or revision when it is proposed on the floor. Approximately one hour of debate is scheduled on the bill, after which it will go directly to a vote.

The bill, if passed, will extend the debt ceiling for three months and withhold Congressional pay if a federal budget is not agreed upon by April 15 — one that House Republicans hope will consist mainly of major spending cuts. However, no provisions appear to be built into the bill that shape what the eventual budget will look like, merely mandating its passage.

Detractors argue that the law is a gimmick that would be unconstitutional: the constitution clearly states that “no law, varying the compensation for the services of the Senators and Representatives, shall take effect, until an election of Representatives shall have intervened.”

To avoid this constitutional issue, the bill does not eliminate congressional pay, but merely holds it in escrow until the budget is passed or the end of the 113th Congress. As Donald Marron explains, “in short, No budget, no pay until January 2015.”

Many Democrats seem pleasantly surprised that the bill does not demand immediate spending cuts but instead gives Congress room to debate the next budget. The White House released a statement which gave no indication Obama would veto the bill.

From Marron, some other facts about the bill:

— It doesn’t just suspend the debt ceiling; it raises it to reflect any new debt accrued during the next three months, “thus [increasing] the debt limit by an amount to be determined later.”

— It prevents the Treasury from building up cash reserves to fund the deficit after May 19. No debts incurred after that date will be considered covered by the debt limit extension.

— Due to the way the bill is structured, it could allow the Treasury secretary to hit "reset" on the extraordinary measures (such as issuing I.O.U.’s to federal retirement accounts) and thus extend the “day of debt limit reckoning” well past May 19.

— It doesn’t actually require a budget be passed — merely that the senate and House approve their own individual budgets. If both houses are unable to agree on a new budget, then all members of congress will still be paid on time.

It’s a smart move by the GOP — following a tough year in which they repeatedly lost budget fight after budget fight They now appear to be largely backing off demands for immediate cuts and rehabilitating their image as the "responsible" party of governance.

You can read the text of the bill online here.