House Republican leaders to offer debt ceiling bill

10 October 2013 19:29  [Source: ICIS news]

WASHINGTON (ICIS)--House Republican leaders on Thursday said they will offer to President Barack Obama legislation to increase the US federal debt limit and end the government shutdown, a move welcomed by the White House.

Although details of the proposed legislation have not been made available, the offer provides the best chance yet that the dual crises of a shutdown and a potential government default may be resolved.

Representative Cathy McMorris Rogers (Republican-Washington), chairwoman of the House Republican conference, said on Thursday that “we’re going to offer legislation that will offer a temporary increase in the debt ceiling”.

McMorris Rogers and other House Republican leaders are meeting with Obama at the White House in an effort to resolve the shutdown and avert a debt limit default.

“We are hopeful that these will be good faith negotiations,” she said shortly before the White House meeting, “over the long term drivers of our debt, over the economic security that we need for this country, as well as the pressing need to open up this government again.”

White House spokesman Jay Carney said that Obama was happy to hear about the proposed legislation, but he said he could not say whether the president would sign such a short-term debt ceiling increase until he has the bill text.

The federal government began a partial shutdown of operations on 1 October, when existing spending authorisation expired.

Republicans in the House - where by law authority for spending resides - have been pressing Obama and the Democrat majority in the Senate for spending cuts in exchange for a continuing resolution (CR) that would restore the federal government’s authority to spend.

Approximately 800,000 of the federal government’s 2.1m employees have been furloughed, and no federal workers are being paid while the spending authority is suspended.

But the risk of a looming federal government default has greatly increased pressure on both parties to reach a resolution.

By Thursday of next week, 17 October, the US Treasury Department says it will run out of money to meet interest and principal payments on loans made to the US government.

The US government’s debt ceiling limit, which is set by Congress, is currently at $16,700bn (€12,400bn). If the House fails to pass a bill raising that limit by next Thursday, the US would technically be in default.

That has never happened before, and economists worry that such a development could trigger a major US and even a worldwide recession.

($1 = €0.74)

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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