Government Shutdown Debt Limit Update

With time running out to raise our nation’s debt limit by this Thursday, Oct. 17 and the government entering its 15th day of being shutdown, House and Senate leaders are working to cobble together deals in their respective chambers. This morning, Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell are expected to brief their Senators on a compromise deal that materialized yesterday.  Terms of the tentative deal include: a debt limit increase through Feb. 7, 2014; funding the government at post –sequester levels of $986.3 billion through Jan. 15, 2014, while providing some flexibility in case the sequester-imposed $10 billion spending cuts go into effect in January; an agreement on an immediate bicameral conference on the budget and on a long-term tax and spending plan, with a deadline for a final conference agreement by Dec. 13; and two Obamacare-related provisions requiring income verification for those individuals receiving a subsidy and a delay of a reinsurance tax, which would levied on health insurance companies which will ultimately be passed on to small businesses and employees who are covered by their employer. If Senators from both parties sign off on the deal, it can be considered on the Senate Floor as early as Wednesday afternoon.  The House continues to be the wild card in these discussions.  Speaker Boehner, under tremendous pressure to open the government and avoid default on one side and, from some in his conference, to either amend or oppose the Senate plan, may even move a new House Republican bill before the Senate deal is finalized.  The House bill could include similar elements of the Senate deal, including extending the debt limit through Feb. 7, funding the government through Jan. 15, 2014, at post-sequester levels, and requiring income verification for Obamacare subsidy recipients.  The bill does not defund Obamacare, but would delay for 2 years the medical device tax and repeal the federal health care subsidies for Members of Congress and Cabinet members. The fact that it appears the House is unwilling to accept a bipartisan Senate compromise – if one materializes – would almost guarantee that things get pushed past Thursday and risk the consequences of a debt default.  In order to prevent a default, short-term extensions of the debt limit could be passed while the House and Senate work to finalize a deal. There remains no real clear path forward and the threat of default is real.  On a positive note and one that may lead a resolution of the situation, House Republicans have accepted the timeframe for the debt limit extension and government funding reported to be in the Senate deal. The next 72 hours will be critical in determining whether or not we can reopen the government and avoid defaulting on our debt.  AGC continues to urge for an end to the government shutdown and an increase in the debt limit followed by serious negotiations on dealing with the debt and deficit in comprehensive fashion.