WASHINGTON: Republicans who control the US House of Representatives have penciled in a possible vote next week on legislation to raise the debt limit as the Treasury warned on Friday that it could start to face payment problems after Feb. 27.
House Majority Leader Eric Cantor on Friday left a spot open in his weekly House floor schedule for “possible consideration of the legislation related to the debt limit” on Wednesday, a sign that his party may be closing in on some conditions for an increase in the government’s $17 trillion borrowing cap.
Some Republican lawmakers and aides said possible conditions still under discussion include the elimination of military pension cuts approved in December and a provision known as the “doc fix” to prevent a drop in payments to doctors under the Medicare healthcare program for the elderly.
These would be a far cry from past Republican debt-limit demands for ambitious spending cuts and may be acceptable to many Democrats.
The Democrat-controlled Senate is set to begin considering a bill next week that would eliminate the pension cuts for non-disabled military retirees of working age, though it is unclear how this would be paid for.
Cantor’s schedule did not indicate whether the debt ceiling legislation would contain conditions or be the “clean” increase sought by President Barack Obama. A spokesman for the Virginia congressman said no decisions had been made on the bill’s language.
A temporary extension of the debt ceiling expired on Friday, forcing the US Treasury Department to resort to extraordinary accounting measures to ensure that it can continue to borrow to pay federal obligations. In a letter to congressional leaders, US Treasury Secretary Jack Lew said these measures would last only about three weeks. By Feb. 27 when they are exhausted, the government could only pay its bills from incoming revenue and cash on hand. “Any foreseeable cash balance would be exhausted quickly,” Lew warned in the letter. Many Republicans say they oppose a so-called clean increase without some measures to reduce deficits or boost economic growth. But the party has struggled to agree on a plan that can win Republican support and still be accepted by Obama and Senate Democrats, who are insisting on an increase without any conditions.
Unlike past episodes, lawmakers this time around are largely avoiding deeply partisan demands and threats that could prompt a standoff and financial market turmoil.
“I’m confident that the United States is not going to default on its debt and we will resolve the need to increase the borrowing authority of this country prior to any deadline that the Treasury issues,” Cantor said on Thursday on the House floor. If the government started missing payments on its many obligations, the rapid contraction in spending would weigh heavily on the economy. Missing debt payments would make matters even worse, possibly triggering a financial panic and an economic depression.
An influential group of corporate chief executives again weighed in on the matter, urging congressional leaders in a letter to swiftly pass a debt limit increase to avoid any uncertainty and a potential increase in borrowing costs.
“Any default by the federal government on its debts would cause devastating, long-lasting effects for all Americans,” AT&T Chairman Randall Stephenson and United Technologies Corp Chairman Louis Chenevert, two top officers of the Business Roundtable, wrote. “Further, prolonged inaction that takes the government up to the precipice would foster uncertainty, dampen consumer and business confidence, risk higher borrowing costs, and could have immediate consequences for hiring and investment,” the executives wrote in the letter released on Friday.
The House currently has only seven more legislative days scheduled through the end of February in which to pass an increase. The House will be out of session Feb. 13-24 to accommodate a retreat for Democratic members late next week and a Presidents Day holiday recess the following week.
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