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Less than a month ago, the country feared that disagreement in Congress would lead to a fiscal crisis. A bill was approved by Congress at the last minute that prevented the high increase in taxes that most Americans were worried about.
However it merely delayed mandated cuts to government spending in defense and domestic programs for two months.
With Democrats and Republicans extremely divided, the fiscal war wages on within Congress and the outcome will have a great effect on the economy.
“It would be a lot easier if they could compromise, put aside party differences and come to a conclusion that would benefit everybody,” said Adam Ramos, a senior history major at DePaul.
Reports from Capitol Hill say that House Republicans will pass a bill this week to temporarily extend the debt limit. According to the Treasury Department the $16.4 trillion borrowing limit was breached three weeks ago.
According to “The Hill,” Treasury Secretary Timothy Geithner stated in a letter to Congress that, in the meantime, the government has had to resort to “extraordinary measures” to prevent default.
The measures are ultimately costing additional money and are referred to as the debt limit breach. According to the website USDebtClock.org, these actions include “suspending the sales of state and local government treasury bonds, borrowing from federal employee pension funds, and postponing the sale and purchase of foreign currency.” The site also reveals that this cost, increasing every day, is reaching $37.5 billion.
Earlier, Republicans had refused to lift the debt ceiling without passing spending cuts.
“The American people do not support raising the debt ceiling without reducing government spending at the same time,” said Republican House Speaker John Boehner, according to BBC News. Now, however, they are threatening to withhold the salaries of lawmakers if a budget is not passed. The Democrat controlled Senate has not passed a budget in four years.
“I personally believe that both sides should offer sensible spending cuts while keeping intact and promoting programs that keep useful jobs,” said Ricky Gandhi, a junior political science and biology major at DePaul. “It all boils down to efficiency. Cut or reform inefficient programs, and spend money on items that can create jobs.”
In a press conference last Monday, President Barack Obama told the public that a rise in the debt ceiling does not authorize the government to spend more money; rather, it is needed to payback for the spending Congress already committed to.
“These are bills that have already been racked up and we need to pay them,” said Obama. “So while I’m willing to compromise and find common ground over how to reduce our deficits, America cannot afford another debate with this Congress about whether or not they should pay the bills they’ve already racked up.”
Full details of the bill that is to be voted on this week have not been released, however it would give the government about three more months of borrowing authority beyond the mid-Feburary deadline that was previously set.
Other deadlines will remain, however, such as spending cuts across the board on March 1 and the possibility of partial government shutdown on March 27, if a budget is not passed by then.
Those consequences would be less severe than defaulting on payments to bondholders, Social Security recepients, and others that would have come with the Government defaulting.
The Republican Study Committee said in a statement that “this is a necessary first step as as we work to halt the decline of America and puts the focus where it belongs: on the Senate who has failed to do their jobs to pass a budget for more than three years.”
Gandhi said that if Republicans and Democrats don’t meet in the middle, “the debt will keep piling on to the point where we will have to either make arbitrary cuts or raise taxes to an extraordinary rate to pay the bills. Both are bad domestic policy.”