Friday, February 1, 2013

US Economy Down

Senate votes to temporarily suspend federal debt limit
Congress gave final approval Thursday to a plan to temporarily suspend the legal cap on the $16.4 trillion national debt, lifting the threat of a government default until early August.

The measure, approved by the Senate 64-34 Thursday, now goes to President Obama for his signature.
US Economy Down
Without congressional action, the administration had predicted that the Treasury would run out money to pay the nation’s bills by early March.

The House passed the bill last week, days after Republican leaders announced that they would not try to use the moment as leverage in their battle with Obama over the federal budget. But House leaders said that they would not vote to raise the $16.4 trillion debt limit — a politically dicey move for which they have in the past demanded deep spending cuts.

Instead, they offered a novel plan to suspend enforcement of the limit through May 18. Under the measure, the Treasury Department can simply ignore the debt ceiling and keep borrowing to cover the cost of federal obligations.

On May 19, the debt limit will kick back in and automatically reset at a higher level. Treasury officials can then begin taking what they call “extraordinary measures” to continue paying the nation’s bills.

Analysts at the Bipartisan Policy Center predict that the Treasury will run up about $450 billion in additional debt through mid-May and that the date of a potential default will be postponed until August — “with a realistic chance of coming even later.” In recent days, administration officials have advised lawmakers that the center’s analysis matches Treasury calculations.

The measure also requires lawmakers in each chamber to adopt a budget blueprint by April 15 or have their paychecks withheld and placed in escrow until this session of Congress ends in 2015. The Senate has not approved a budget plan since 2009, when Democrats controlled both chambers. - Washington Post.