Congress aims for fast budget, debt limit passage

28 Oct 2015 | Author: | No comments yet »

Budget deal’s big winner: U.S. economy.

If the budget deal hammered out by outgoing House Speaker John Boehner and the White House passes both houses of Congress it would at least temporarily end a bruising era of shutdowns and default freak outs that rattled Wall Street, raised government borrowing costs and crushed business and consumer confidence. House of Representatives, lobbied lawmakers Tuesday to approve a new government spending plan and increase the country’s borrowing authority, even as conservative Republicans attacked the deal. It would also clear out one big worry facing the Federal Reserve as it attempts to finally end an era of emergency interest rate policy that has the left the central bank with few weapons in its arsenal if the economy does turn south again. “This would take away a very big potential negative and remove a serious threat at a time that the economy feels a little fragile,” said Mark Zandi, chief economist at Moody’s Analytics. “The budget battles of the last five years did a great deal of damage in terms of raising borrowing costs, constraining business investment and depressing consumer spending. The members of the suddenly renowned House Freedom Caucus have spent months railing against just this type of deal—a bipartisan accord negotiated entirely in secret by party leaders and then presented, as if by fiat, to rank-and-file lawmakers for their immediate approval.

Boehner has left a parting gift: a two-year, $80 billion budget deal negotiated by the lame-duck speaker with fellow congressional leaders and the Obama administration that also raises the nation’s borrowing limit. Before agreeing to support Ryan last week, the hard-line caucus met with him to make sure he was open to the rules changes they were seeking that would make these types of top-down, last-minute agreements less likely.

Several conservative lawmakers, who have long chided Boehner for making deals on spending and key policy issues with Democratic President Barack Obama, complained about the deal. A White House official said the deal would “break the cycle of short-sighted, crisis-driven decision-making.” The toxic fiscal cycle – which began with a near default and the first ever U.S. credit rating downgrade in the summer of 2011 – clearly slowed the recovery following the brutal financial crisis and recession. They said it broke a 2011 pact limiting spending and bypassed rank-and-file lawmakers in deciding to boost spending by $50 billion in 2016 and another $30 billion in 2017. “I think this process stinks,” said Ryan. “This is not the way to do the people’s business.

House Republicans have been in upheaval since Boehner, under pressure from elements of his party’s hard right flank, decided to pack his golf clubs and return to Ohio, and Huelskamp has been at the center of the chaos. After all, Congress doesn’t need to pass a spending bill until December, and the debt ceiling won’t be breached for another week, which means Capitol Hill has a few more days before panic erupts. The government shutdown of 2013 shaved an estimated 1.5 percentage points from economic growth; the economy has struggled to stay above 2 percent annual growth throughout the recovery. “These events clearly produced big hits to confidence and equity markets and hurt both Main Street and Wall Street,” said Jim O’Sullivan of High Frequency Economics. “The presumption this time was that the debt limit stuff was just a bluff, but if that had been wrong it would have been very bad.” A budget agreement reached in 2013 helped usher in a period of relative calm in Washington that boosted confidence and helped lead to over-4 percent growth in the second quarter and third quarters of 2014, the strongest period of the recovery.

But Boehner has said since he announced his resignation last month that he wanted to “clean the barn up” before he goes. “I didn’t want him to walk into a dirty barn full of you-know-what,” the departing speaker explained again on Tuesday. Boehner negotiated the deal with the Senate Republican leader Mitch McConnell, as well as House Democratic leader Nancy Pelosi and Senate Democratic chief Harry Reid. It isn’t clear whether Huelskamp can really take much credit for the dramatic shakeup in the House GOP leadership, which would assume Huelskamp was working behind the scenes to force Boehner out.

The plan would fully fund the federal government and extend the government’s debt ceiling, or borrowing authority, through March 2017, two months after Obama leaves office. The new budget deal would also ease some of the fiscal tightening that began with the “sequestration” agreement that ended the 2011 debt limit crisis. But there’s no question that he relished his role in Boehner’s exit and is leveraging it to increased his stature among conservatives. “Huelskamp has made a national name for himself. Republicans won’t officially nominate Ryan until Wednesday, and after seeing the swift backlash that forced Kevin McCarthy to abandon his bid earlier this month, he can’t afford to risk angering conservatives before he has the gavel in hand. His willingness to go on MSNBC into enemy territory has made him one of the poster children for the tea party and Freedom Caucus,” said Chapman Rackaway, an associate political science professor at Fort Hays State University in Hays, Kan. “I think it’s safe to say there’s few if any members of Congress who had a more contentious relationship with Speaker Boehner,” Rackaway said. “Now, at the very least . . . the primary person who had an ax to grind against Huelskamp isn’t there to mobilize resources against him.” Burdett Loomis, a University of Kansas political science professor, said Huelskamp has come to signify “the hardest of the hard core” within the Freedom Caucus, which has “highlighted his status within the Republican Party” nationally and in Kansas.

The extra spending would be offset by long-term savings to the Social Security Disability Insurance program and a cap on payments to health care providers by Medicare, the federal government’s health insurance program for senior citizens. Monday, White House Press Secretary Josh Earnest noted that Huelskamp voiced objections to the National Defense Authorization Act, which Obama vetoed because it circumvented mandatory spending caps by funneling an additional $38 billion to the Pentagon through a special account not subject to the caps. “He said this bill . . . uses budget gimmicks to get around spending caps established by Washington,” Earnest said. “I think this is a very rare instance where Mr. The structure of the agreement is remarkably similar to the two-year budget that Ryan himself negotiated with Democratic Senator Patty Murray two years ago. The plan must be approved by the House and Senate and signed by Obama before next Tuesday, November 3, when the government’s current borrowing authority expires and the nation faces a first-ever default on its debt obligations. The latest budget agreement is not exactly a massive stimulus spending plan — the Congressional Budget office says it would reduce the deficit by $76 billion over ten years — but does represent another move away from immediate austerity.

Huelskamp is expressing a concern that is generally shared by the Obama administration.” But will Huelskamp – and Kansas – benefit from his increased profile? Both accords brought relief from sequestration spending caps for defense and domestic programs, paid for with a hodgepodge of cuts to other initiatives and relatively minor changes to entitlements. “Frankly, if you look at this, it isn’t a whole lot different than what he and Senator Murray put together two years ago,” Boehner said, in a statement that would hinder Ryan if it wasn’t so obvious.

Congressional leaders would then enter into negotiations to determine how to fund individual government agencies before December 11, when a temporary spending plan expires. Patty Murray (D-Wash.) said it “restores critical investments in health care, education, defense jobs, and other priorities.” Wall Street reacted tepidly to the news out of D.C. on Tuesday, with most traders expecting that Washington would find a way out of its latest fiscal mess. Huelskamp was kicked off both that committee and the House Budget Committee in 2012 by Boehner allies as payback for Huelskamp’s outspokenness and for bucking the party on key votes. Senator Ted Cruz deemed it “complete and utter surrender,” while a few House members called on Ryan to state his position on it before Republicans vote on his candidacy Wednesday. The House Republican caucus is set to formally pick Ryan as its choice for House speaker on Wednesday, with the full House expected to ratify the choice on Thursday.

He backed down, at least for the moment, on his demand that Republicans modify a procedural tool allowing dissidents to oust a speaker in a floor vote. And on Tuesday, he spoke out against a move by a coalition of Democrats and moderate Republicans to reauthorize the Export-Import Bank by going around the leadership. He has a 100 percent conservative rating from FreedomWorks and is tied as the 21st most conservative member of Congress, with an 89 percent rating from Heritage Action for America, the political arm of the Heritage Foundation.

They question his support for bailing out Wall Street financial institutions, overhauling the nation’s immigration laws, and forging a budget pact with Sen.

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