House passes debt ceiling increase
The bill would let the Treasury Department borrow new money until mid-May. In exchange, the legislation would require lawmakers in both chambers of Congress to pass a budget resolution or have their pay withheld until they do.
House approves bill to defuse debt ceiling - Jan. 23, 2013
Here's how the bill would work:The proposal would suspend the debt ceiling until May 18. And Treasury could continue to borrow for payments that have to be made during the suspension period and nothing else. "In short, no funny stuff," Donald Marron, a former Congressional Budget Office, noted inhis blog.The debt ceiling would then be restored at its current level of $16.394 trillion plus however much Treasury borrowed during the suspension period.Related: Debt ceiling FAQsAfter May 18, Treasury likely could again use "extraordinary measures" to stave off the prospect of default for awhile, giving Congress extra time to raise the debt ceiling. The Bipartisan Policy Center estimates that if the House bill is enacted by the end of January, Treasury could have "sufficient funds to meet all federal financial obligations through at least the end of July."
The bill would also open a path to a longer term increase: It would require the House and Senate to each agree by April 15 to a budget resolution for fiscal year 2014. And such a measure, which is intended to set spending and revenue levels for the next five to ten years, can include debt ceiling increases, said Pete Davis, a former Hill budget staffer who now runs Davis Capital Investment Ideas.If the House and Senate don't meet the April 15 deadline, lawmakers' pay would be withheld until they pass a budget resolution or until the current Congress ends in January 2015, whichever comes first.So it's not that lawmakers won't get paid if they miss the deadline. Their salaries would be held in escrow and paid out at some point later.It's also noteworthy that the bill doesn't actually require Congress to enact a budget, just that each chamber pass a budget resolution, Marron noted.House Republicans, in coming up with the temporary debt ceiling solution, are in essence conceding that the debt ceiling fight is not their best shot at securing spending cuts and substantive deficit reduction.