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Economy

No spending cuts but Debt limit increased by three months

January 21, 2013 by Katty Warnes in Economy with 0 Comments

Northern, WI 1/20/2013 (gdpwatch) – House Republicans have agreed to a 3-month debt-limit increase without any spending cuts. Senate Democrats will be forced by Republicans to agree on a spending plan budget.

Ohio speaker John Boehner said the spending issues plaguing the government should be dealt by making it obligatory for the Senate to work in tandem with the House. Since the Democrats have an increased majority, the Republicans know they have to review their aims.

The Republicans are even demanding a blockage of Congress-members’ salaries if a budget is not approved soon. They will pursue demands on spending cutbacks but won’t hold the economy hostage. After paying all dues, Congress has to immediately document a clean debt-limit increase. The Senate remains silent on the demand of pay cuts to Congress members.

New spending has to be passed before March 27 or else face a total government shutdown. To push their demands for spending cuts, Republicans plan to use two other economic deadlines – the postponed $110 billion automatic spending cuts & surpassing of $16.4 trillion in borrowing limits.

Republican views are that spending cuts become necessary to counter increases in the debt ceiling whereas Obama is demanding more tax revenue to counter spending cuts. Important agendas like immigration and gun violence are kept on the back-burner while the arguments rage about debt ceilings.

Budget committee chairman Paul Ryan said the Republicans want a mutual dialogue to make progress in controlling debt but political fragmentation in Congress is limiting that ability of the Republicans.

A democrat spokesman said the debt-limit increase does not alleviate the uncertainty faced by the economy. It is a bargaining tactic used by past presidents to counter spending cut demands.

Republican Mick Mulvaney said in a TV interview that support for short term debt-limit is rising. He says it is agreeable if we get small reforms and fixes for some time-extensions of borrowing authority.

Since its inception in 1917, the debt-limit has been intermittently raised 79 times by Congress and Republican presidents. But investors in US Treasury bonds are not worried even though they are directly at risk if the government defaults. The latest increase in debt ceiling was signed by Obama resulting in a decrease in the nation’s credit rating.

The budget resolutions have to be passed early every year so that expenditures can be planned well in advance.

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About Katty Warnes

Katty Warnes Will began her career at the New York Post as a staff photographer. In an environment that created headlines like "Headless Body found in Topless Bar" and "Axis of Weasel", Victoria learned valuable skills that allowed her to eventually go out on her own.  Katty is also a freelance photographer who works appears in newspapers, newswires and magazines world-wide: from the Associated Press to W magazine.  She hails from the Nations capital, but now resides in New York with her two French Bulldogs. She also loves Country Music.

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