The Obama administration said it welcomes a move by House Republicans to vote tomorrow on lifting the nation’s debt ceiling through mid-May as a de-escalation of the fiscal debate.
The measure “lifts the immediate threat of default and indicates that congressional Republicans have backed off an insistence on holding the nation’s economy hostage to extract drastic cuts in Medicare, education and other programs,” President Barack Obama’s budget office said in a statement.
White House spokesman Jay Carney said the administration still prefers a long-term extension of the nation’s debt ceiling. Still, Obama “would not stand in the way” if Congress passes the proposal, he said at a briefing.
The Treasury reached its statutory borrowing limit on Dec. 31 and is using “extraordinary” measures to avoid breaching the ceiling. Those measures will work only until mid-February to early March, Treasury Secretary Timothy F. Geithner said in a Jan. 14 letter to congressional leaders.
While the White House said it wouldn’t block the House bill, according to the statement the measure “introduces unnecessary complications, needlessly perpetuating uncertainty in the nation’s fiscal system.”
Under the House Republican plan, the government’s $16.4 trillion borrowing limit would be suspended until May 19. At that point, the measure would allow the nation’s borrowing authority to automatically be increased to accommodate the amount the U.S. Treasury borrowed during those three months.
The House suspension plan is accompanied by a prod to lawmakers on the budget. It says the House and Senate each must adopt a budget resolution for the next fiscal year by April 15 or the pay for members of the chamber that doesn’t act will be withheld and placed in an escrow account.
Senate Majority Leader Harry Reid said he was “very glad” that the House was planning to send over “a clean debt ceiling bill.”
“The other stuff on it, we’ll approach that when we need to,” Reid, a Nevada Democrat, told reporters.
The Senate’s top Republican, Mitch McConnell of Kentucky, said the House vote tomorrow will make clear that “they’re hoping to act” to keep the U.S. from defaulting in its debt.
“And then it will be incumbent upon the Senate Democratic majority to function,” McConnell told reporters. “What is their idea about raising the debt ceiling?”
The debt limit has been raised periodically since its creation in 1917 during the presidency of Woodrow Wilson. Since 1960, Congress has raised or revised the limit 79 times, including 49 times under Republican presidents. The U.S. never has defaulted on its obligations.
Investors in U.S. Treasury bonds, who most directly bear the risk of a government default, haven’t shown alarm over the political fight in Washington. The 10-year yield fell one basis point, or 0.01 percentage point, to 1.83 percent at 3:04 p.m. New York time, according to Bloomberg Bond Trader prices.
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