The House voted on legislation Wednesday that will raise the debt ceiling for three months and delay a US default. Even though this is just a short term fix, the Obama administration said it supports it.
The legislation prevented a devastating default of US debt and payments next month and instead give Congress three more months to come up with an agreement on the budget, taxes, spending and the deficit. The move would cause the congressional budget battles to once again take place – but this time in March.
The legislation contains a “no budget, no pay” segment that ensures both House and Senate members will no longer receive their paychecks if a budget isn’t agreed upon by April 15, putting further pressure on legislators to come up with a plan. Although President Obama prefers a long-term solution and said incremental increases in the debt ceiling ultimately harm the economy, continued disagreement in Congress has prompted him to support the extension. While House Democrats appear widely opposed to the measure, Senate Democrats are reluctantly supporting it, AP reports.
The March talks will come at a time when automatic spending cuts are set to go into effect and severely affect the Pentagon budget. The military would face a 30 percent reduction in operating costs for Army posts, while the Pentagon would have to determine how it could come to terms with $500 billion in cuts over the next decade.
“The fiscal situation and outlook are serious. Our funding is in doubt as we support forward-deployed troops, those training and Wounded Warriors,” wrote Army Secretaries John McHugh and Gen. Raymond Odierno in a letter to commanders.
The automatic cuts would trim $85 billion from the 2013 budget, which the GOP plans to re-sequester during the next budget battle. Members of Congress who oppose the spending cuts will be forced to come up with an agreement on how to replace them, if they want to come up with an agreement on the deficit. A battle on raising taxes will likely ensue. Continue reading