Story Summary

Government Shutdown

United_States_Capitol_-_west_front

Story Timeline
Previous Next
This story has 9 updates

Governor Tom Corbett today issued the following statement on the end of the Federal Government shutdown and the debt ceiling vote:

“Congress and the President have been able to resolve their differences and vote to operate the federal government again.  My expectation is that over the next several months all parties can work together in a bipartisan fashion to develop a plan to move America forward and to avoid future confrontation that jeopardizes the country.

“I want to thank all Pennsylvanians for their resolve during these past two weeks of uncertainty.  I also appreciate the hard work and diligence of all commonwealth agencies in delivering the vital health and safety related services to all Pennsylvanians throughout the shutdown.  It is a testament to the commitment and dedication of our state employees.”

For more information, visit www.pa.gov.

By Holly Yan. Tom Cohen and Greg Botelho, WASHINGTON (CNN) — Mini coffee cakes from the vice president. Hugs from colleagues, along with eye-rolls about their “vacation” due to the partial government shutdown.

Federal workers were back on the job Thursday, streaming into government offices in Washington and opening national landmarks such as St. Louis’ Gateway Arch after the 16-day shutdown that ended when President Barack Obama signed a spending and debt ceiling agreement passed by Congress on Wednesday night.

The protracted brinksmanship flirted with a possible U.S. default before ending when Republicans caved to the insistence of Obama and Democrats that legislation funding the government and raising the federal borrowing limit should be free — or at least mostly free — from partisan issues and tactics.

After all the bickering and grandstanding, the billions lost and trust squandered, the result amounted to much ado about nothing.

“I am happy it’s ended,” Vice President Joe Biden said when he arrived at the Environmental Protection Agency with coffee cakes handed out to returning workers. “It was unnecessary to begin with. I’m happy it’s ended.”

In the basement of the U.S. Capitol, there were exuberant hugs as furloughed colleagues were welcomed back, but there was also bitterness toward the elected legislators in charge upstairs.

A common refrain was the sarcastic question: “How was your vacation?” Responses were often nonverbal — an eye roll, a head shake, an angry glare, the occasional ironic laugh.

The agreement to end the shutdown and avert a potential government default came Wednesday from Senate leaders after House Republicans were unable to get their own caucus to support a GOP proposal.

Hardline Republicans, whose opposition to Obama’s signature health care reforms set the shutdown and debt ceiling crisis in motion, got pretty much zip — except maybe marred reputations.

“To say we as Republicans left a lot on the table would be one of the biggest understatements in American political history,” Republican Sen. Lindsey Graham of South Carolina tweeted.

However, it all amounts to the cliched kicking of the can down the road, because the deal passed by Congress in lightning fashion Wednesday night and signed by Obama in the wee hours of Thursday only funds the government through January 15 and raises the debt ceiling until February 7.

The agreement set up budget negotiations between the GOP-led House and Democratic-led Senate intended to reach a broader agreement on funding the government for the fiscal year that ends on September 30.

Ideally, a budget compromise would ensure government funding and include deficit reduction provisions that would prevent another round of default-threatening brinksmanship in three months’ time.

Obama planned a live statement at 10:35 a.m. ET, about an hour after the leaders of the House and Senate budget committees — Republican Rep. Paul Ryan of Wisconsin and Democratic Sen. Patty Murray of Washington — were having a symbolic breakfast to get the dialogue started.

They noted that their negotiations — called a conference between their two committees to work out differences in budgets passed by each chamber — differed from a special committee set up under 2011 legislation that failed to agree on broader deficit reduction steps.

“Chairman Ryan knows I’m not gonna vote for his budget. I know that he’s not gonna vote for mine,” Murray told reporters, saying the goal was to find “the common ground between our two budgets that we both can vote on.”

Last-minute save

Everything came together Wednesday on a frenzied night of deadline deals.

The Senate brokered a bill to end the shutdown that began on October 1 and raise the debt limit, then passed with broad bipartisan support.

The GOP-led House also passed it, with about 80 Republicans joining a unified Democratic caucus in support, while well over 100 House Republicans voted “no.”

Had Congress not approved a debt limit increase, the government would have lost its authority to borrow more money to pay all of its bills. Social Security checks and veterans’ benefits could have stopped. The markets could have gone into a tailspin.

Approval of the temporary spending plan meant the return to work of more than 800,000 furloughed employees, while more than 1 million others who’ve been working without pay will get paychecks again.

A provision in the agreement guaranteed back pay for government workers for the shutdown.

A temporary bandage

However, the bill that passed Wednesday night doesn’t address many of the contentious and complicated issues that continue to divide Democrats and Republicans, such as changes to entitlement programs and tax reform.

“We think that we’ll be back here in January debating the same issues,” John Chambers, managing director of Standard and Poor’s rating service, told CNN on Wednesday night. “This is, I fear, a permanent feature of our budgetary process.”

Obama said Wednesday night that he’s not in the mood for more of the same, saying politicians have to “get out of the habit of governing by crisis.”

“Hopefully, next time, it will not be in the 11th hour,” he told reporters, calling for both parties to work together on a budget, immigration reform and other issues.

A $24 billion battle

The partial government shutdown that lasted 16 days has come at a steep cost. Standard and Poor’s estimated it took a $24 billion bite out of the economy.

Then there’s the impact it had on politicians’ image. If there’s one thing polls showed that Americans agreed on, it’s that they don’t trust Congress — with Republicans bearing more blame than anyone else for what transpired.

Both sides kept talking past each other, with Republicans insisting for a time that defunding, delaying or otherwise altering Obamacare must be part of any final deal. Democrats, meanwhile, stood firm in insisting they’d negotiate — but only after the passage of a spending bill and legislation to raise the debt without anti-Obamacare add-ons.

In the end, Democrats largely got what they wanted after some last-minute talks by Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell.

Reid hailed the agreement he worked out with McConnell as “historic,” saying that “in the end, political adversaries put aside their differences.”

McConnell said any upcoming spending deal should adhere to caps set in a 2011 law that included the forced cuts known as sequestration.

“Preserving this law is critically important to the future of our country,” McConnell said of the Budget Control Act, which resulted from the previous debt ceiling crisis in Washington.

Republicans did get a small Obamacare concession: requiring the government to confirm the eligibility of people receiving federal subsidies under the health care program.

While some Republicans, such as tea party favorite Sen. Ted Cruz of Texas, claimed moral victories in energizing their movement, House Speaker John Boehner didn’t even pretend his side came out victorious.

“We fought the good fight; we just didn’t win,” he told a radio station in his home state of Ohio.

Cruz, despite being in the Senate, is credited with spearheading the House Republican effort to attach amendments that would have dismantled or defunded Obamacare.

All were rejected by the Democratic-led Senate, and Obama also pledged to veto them, meaning there was virtually no chance they ever would have succeeded.

Republican Sen. Kelly Ayotte of New Hampshire called the House GOP tactic of tying Obamacare to the shutdown legislation “an ill-conceived strategy from the beginning, not a winning strategy.”

Markets mixed after agreement

Wall Street sighed with relief. U.S. stocks rose Wednesday on the news of an agreement. The benchmark Dow Jones Industrial Average jumped more than 200 points on the day. But U.S. stocks fell at Thursday’s opening, with investors discouraged by poor corporate results.

In addition, world markets had a tepid reaction Thursday, with markets mixed in Asia.

What’s next

The Senate’s Democratic leader said he never wants to go through the recent turmoil ever again.

“Let’s be honest: This was pain inflicted on our nation for no good reason, and we cannot make — we cannot, cannot make — the same mistake again,” Reid said Wednesday.

But former House Speaker Newt Gingrich predicts the tea party and staunch conservatives in the GOP will be more energized after not getting the anti-Obamacare amendments they wanted.

“They will be more embittered, more angry. They will find more ways to go after Obama because they can’t find any way to get him to negotiate,” he said, adding that he expects Obamacare to become the defining issue of the next two elections cycles.

As Obama walked away from a news conference Wednesday night, he was asked whether he thought America would be going through this brouhaha again in a few months.

His answer: “No.”

We’ll see.

CNN’s Brianna Keilar, Deirdre Walsh, Dana Bash, Erin McPike, Steve Brusk, Eliott C. McLaughlin, Paul Steinhauser, Ashley Killough, Craig Broffman, Jim Acosta, Mark Preston, Dan Merica and Lisa Desjardins contributed to this report.

The big news out of Washington, DC is the government shutdown is over, and the U.S. will not have to default on its bills.
The shutdown lasted 16 days and the economy is already feeling the effects. This morning, James Igo, a financial advisor with Morgan Stanley, joined FOX43 Morning News to talk about the economic impact of this shutdown.

By Tom Cohen, Greg Botelho and Holly Yan, CNN

Barack ObamaWashington (CNN) — It’s over. But just for now.

President Barack Obama signed a bill that ends the 16-day partial government shutdown and raises the debt ceiling, the White House said early Thursday morning.

Weeks of bitter political fighting gave way to a frenzied night in Washington as Congress passed the bill that would prevent the country from crashing into the debt ceiling.

Lawmakers worked precariously close to the midnight debt ceiling deadline amid warnings the government could run out of money to pay its bills if it didn’t raise the debt ceiling.

Federal workers should expect to return to work Thursday morning, the director of the Office of Management and Budget said.

Director Sylvia Mathews Burwell said employees should check the Office of Personnel Management’s website for updates.

Yosemite National Park said it was already resuming operations Wednesday night.

The GOP-led House gave the final stamp of approval to the Senate-brokered bill, passing it easily late Wednesday night. But it wasn’t Republicans who made it happen; a majority of that party’s caucus actually voted against the measure, which only passed because of overwhelming Democratic support.

Read the bill

A temporary bandage

The debt cushion now extends through February 7, with current spending levels being authorized through January 15.

That means a few months of breathing room, but little more. After all, the bill doesn’t address many of the contentious and complicated issues — from changes to entitlement programs to tax reform — that continue to divide Democrats and Republicans.

“We think that we’ll be back here in January debating the same issues,” John Chambers, managing director of Standard and Poor’s rating service, told CNN on Wednesday night “This is, I fear, a permanent feature of our budgetary process.”

The heads of the Senate and House budget committees — Democratic Sen. Patty Murray of Washington and GOP Rep. Paul Ryan of Wisconsin — will meet Thursday with an eye on addressing these budget divides. They’ll helm budget negotiations intended to come up with a broader spending plan for the rest of fiscal year 2014, which ends on September 30.

Obama, for one, didn’t seem in the mood Wednesday night for more of the same — saying politicians in Washington have to “get out of the habit of governing by crisis.”

“Hopefully, next time, it will not be in the 11th hour,” Obama told reporters, calling for both parties to work together on a budget, immigration reform and other issues.

As he left the podium, Obama was asked whether he believed America would be going through all this political turmoil again in a few months. His answer:

“No.”

Come together

The past 16 days of the partial government shutdown have come at a steep cost. Standard and Poor’s estimated it took $24 billion out of the economy. The possibility of a debt default — something that, Chambers pointed out, is gone for now but not entirely — spooked investors on Wall Street and hiked interest rates.

And then there’s the impact the ordeal had on politicians’ image. If there’s one thing polls showed Americans agreed on, it’s that they don’t trust Congress — with Republicans bearing more blame than anyone else for what transpired.

Both sides talked past each other continuously, with Republicans insisting for a time that defunding, delaying or otherwise altering Obamacare must be part of any final deal. Democrats, meanwhile, stood pat in insisting they’d negotiate — but only after the passage of a spending bill and legislation to raise the debt without unnecessary add-ons.

In the end, Democrats largely got what they wanted — after some last-minute talks by Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell.

“We’ve been able to come together for a lot of different reasons,” said Reid, a Nevada Democrat.

Republicans did get a small Obamacare concession: requiring the government to confirm the eligibility of people receiving federal subsidies under the health care program.

But while some Republicans, such as tea party favorite Sen. Ted Cruz, claimed moral victories in energizing their movement, House Speaker John Boehner didn’t pretend his side was the victor.

“We fought the good fight; we just didn’t win,” Boehner told a radio station in his home state of Ohio.

Boehner to fight another day

Democratic Sen. Chuck Schumer of New York blasted Cruz and the rest of the tea party wing in Congress for what he called the “reckless, irresponsible politics of brinksmanship over the last few weeks.”

“It was not America’s finest moment,” he said.

Markets soar on agreement

News of the deal brought some relief to Wall Street as well as Washington, with pressure to resolve the impasse building with the approach of the Thursday deadline to raise the debt ceiling or face default.

U.S. stocks rose on the news of an agreement, with the benchmark Dow Jones Industrial Average jumping more than 200 points on the day.

Reid hailed the agreement he worked out with McConnell as “historic,” saying that “in the end, political adversaries put aside their differences.”

McConnell fired an opening salvo for the budget talks expected to begin soon and continue until December when he said any ensuing spending deal should adhere to caps set in a 2011 law that included forced cuts known as sequestration.

“Preserving this law is critically important to the future of our country,” McConnell said of the Budget Control Act, which resulted from the previous debt ceiling crisis in Washington.

The focus on an agreement shifted to the Senate after House Republicans failed on Tuesday to come up with a plan their majority could support, stymied again by demands from tea party conservatives for outcomes unacceptable to Obama and Senate Democrats, as well as some fellow Republicans.

Rep. Charles Rangel compares tea party in House to ‘confederates’

Cruz, despite being in the Senate, is credited with spearheading the House Republican effort to attach amendments that would dismantle or defund the health care reforms known as Obamacare to previous proposals intended to end the shutdown.

All were rejected by the Democratic-led Senate, and Obama also pledged to veto them, meaning there was no chance they ever would have succeeded.

Republican Sen. Kelly Ayotte of New Hampshire called the House GOP tactic of tying Obamacare to the shutdown legislation “an ill-conceived strategy from the beginning, not a winning strategy.”

CNN’s Brianna Keilar, Deirdre Walsh, Dana Bash, Michael Pearson, Paul Steinhauser, Ashley Killough, Steve Brusk, Craig Broffman, Jim Acosta, Mark Preston, Dan Merica and Janet DiGiacomo contributed to this report.

WASHINGTON — As the government shutdown dragged on, Senator Susan Collins of Maine was spending another weekend on Capitol Hill, staring at C-Span on her Senate office television as one colleague after another came to the floor to rail about the shuttered government.

Frustrated with the lack of progress, Ms. Collins, a Republican, two Saturdays ago quickly zipped out a three-point plan that she thought both parties could live with, marched to the Senate floor and dared her colleagues to come up with something better. A few days later, two other Republican female senators eagerly signed on — Lisa Murkowski of Alaska, who overcame theTea Party to win re-election in 2010, and Kelly Ayotte of New Hampshire, who benefited from the Tea Party wave.

Together the three women started a bipartisan group whose negotiating framework formed the centerpiece of a tentative Senate deal nearing completion Monday to reopen the federal government and avert a disastrous default.

“Before I went to the Senate floor, no one was presenting any way out,” Ms. Collins said. “I think what our group did was pave the way, and I’m really happy about that.”

In a Senate still dominated by men, women on both sides of the partisan divide proved to be the driving forces that shaped a negotiated settlement. The three Republican women put aside threats from the right to advance the interests of their shutdown-weary states and asserted their own political independence.

Read More: www.nytimes.com

Pennsylvania’s two U.S. Senators voted along party lines on the Senate bill that reopens the federal government and avoids a default.

Senator Bob Casey (D) statement:

“I am grateful that the Senate was able to move forward with a bipartisan agreement to reopen the government and avoid default. Pennsylvanians deserve better than the irresponsible brinksmanship they saw over the last few weeks.  I hope this experience will help change the tone in Washington and that members on both sides of the aisle will refocus their efforts on creating jobs and strengthening the economy.  I intend to work immediately to push bipartisan legislation to help middle class families like my Small Business Tax Certainty and Growth Act.

Senator Pat Toomey (R) statement:

“I voted against increasing America’s debt burden because the legislation does nothing whatsoever to address the overspending problem that has caused our debt to mount”.

“The one major redeeming aspect of this bill is that it reopens the government,” said Senator Toomey.  “I disagreed with the plan to make funding the government contingent on defunding Obamacare and I am glad this bill will get the shutdown behind us.  But I cannot support piling hundreds of billions of dollars of debt on current and future generations of Americans without even a sliver of reform to start putting our fiscal house in order.”

Salvatore Cullari is in the business of making wine. He prides himself on making new creations. In August he decided to try his hand at a pumpkin wine for fall.

“I have never made one before. So I got all of the ingredients ready that I needed basically like pumpkin flavor, pumpkin extracts, and pumpkin spice. I kind of put together a mock sample of what I wanted to use,” said Salvatore Cullari, owner of Cullari Vineyards and Winery. “I was ready to get the formula approved and basically what happened was the government shut down. Everything was put on hold.”

Although Cullari knew about the looming shutdown he wasn’t expecting this. “I never even thought about it. When they were talking about a government shutdown, it’s one of those things you should know because it is a government agency, but it just kind of went over my head. I just didn’t even think about it,” said Cullari.

With any new wine that is not made entirely of grapes, you first have to get the ingredients, or formula, approved through the Alcohol and Tobacco Tax and Trade Bureau. “You have to get the formula approved first, they have to see what’s in there. Based on the formula they will tell you the exact wording you should put on the labels. It’s a two-step process,” said Cullari.

For all new wines the label must be approved through the agency. “For example lets say I was making for the first time a Chardonnay. I would still have to get the Chardonnay label approved. I would not have to get the formula approved because it’s 100% Chardonnay, but the label still has to be approved,” said Cullari.

If the shutdown ends soon, Callari hopes to get his pumpkin wine approved by Thanksgiving. The process usually takes six weeks. So he is concerned there may be a backlog. In which case, he would shelf his plans until next year.

“When the government does come back there’s probably going to be a huge waiting list of formulas and labels that have to be approved. And I don’t know how long it’s going to take to be honest,” said Cullari.

The Alcohol and Tobacco Tax and Trade Bureau posted this notice on their website:

APPROPRIATIONS LAPSE NOTICE
CESSATION OF TTB OPERATIONS
WITH LIMITED ACCESS TO WWW.TTB.GOV

Due to the lapse in government funding, only web sites supporting excepted functions will be updated unless otherwise funded.  Our TTB web site, http://www.ttb.gov, will be available during this shutdown period and you will continue to be able to file electronic payments and returns for federal excise taxes and operational reports through https://www.pay.gov/paygov/.

However, there will be no access to TTB’s eGovernment applications including, but not limited to, Permits Online, Formulas Online, and COLAs online.  Other information on the web site may not be up to date, and TTB will not be able to respond to questions or comments submitted via the web site until appropriations are enacted.

TTB will suspend all non-excepted TTB operations, and no personnel will be available to respond to any inquiries, including emails, telephone calls, facsimiles, or other communications. The web site and operations will fully resume when appropriations are reenacted.  TTB has directed employees NOT to report to work and they are prohibited by federal law from volunteering their services during a lapse in appropriations.

Once funding has been restored, and the government shutdown is over, we will work to restore regular service as soon as possible.

Page last reviewed/updated: 10/01/2013

What is it about the debt ceiling issue that causes the market to react?
If this doesn’t happen, what does this mean for our money and 401K’s?
Will the market stay at these record highs over the next few months?
What are your thoughts on the gold market?

By Tom Cohen, WASHINGTON (CNN) — Senate leaders on Wednesday announced a deal to end the partial government shutdown and avoid a possible U.S. default, and House Speaker John Boehner urged fellow Republicans to support it while a key GOP conservative said he wouldn’t try to block it in the Senate.

“We fought the good fight; we just didn’t win,” Boehner told a radio station in his home state of Ohio in reference to GOP efforts to dismantle or defund President Barack Obama’s signature health care reforms and extract deficit reduction concessions around the need to fund the government and raise the federal borrowing limit.

The Democratic-led Senate was expected to pass the agreement sometime Wednesday night, followed within hours by a vote in the Republican-led House.

Both chambers will have to take special steps to get the legislation passed that quickly, raising concerns that tea party conservatives led by Sen. Ted Cruz of Texas would block or delay it in a final effort to include provisions intended to harm Obama’s signature health care reforms.

However, Cruz told reporters that he wouldn’t mount a filibuster or employ other procedural moves against the agreement. At the same time, he criticized his Senate colleagues for what he called their failure to listen to the American people and said the fight against Obamacare will continue.

National polls conducted since the start of the shutdown on October 1 indicate that while all sides are feeling the public’s anger over the partisan political impasse, more blame is pointed at the Republicans in Congress rather than Democrats or Obama.

Boehner and other House Republican leaders told their caucus they would vote for the agreement at an afternoon meeting that participants said ended with a standing ovation for the embattled speaker.

“Blocking the bipartisan agreement reached today by the members of the Senate will not be a tactic for us,” Boehner said in a statement. “Our drive to stop the train wreck that is the president’s health care law will continue.”

News of the deal brought some relief to Wall Street as well as Washington, where the shutdown reached a 16th day with the government poised to lose its ability to borrow more money to pay bills after Thursday.

Senate Majority Leader Harry Reid hailed the agreement he worked out with his GOP counterpart Mitch McConnell as “historic,” saying that “in the end, political adversaries put aside their differences.”

Obama praised Senate leaders for reaching a compromise, and urged Congress to act quickly, White House spokesman Jay Carney said.

“As soon as possible is essentially the recommendation we have from here,” he said.

U.S. stocks rose on the news of an agreement, with the benchmark Dow Jones Industrial Average jumping more than 200 points on the day.

Short-term plan

Reid said the Senate deal under discussion would reopen the government by funding it until January 15. It also would raise the debt limit until February 7 to avert a possible default on U.S. debt obligations for the first time.

Also, the White House supports a provision in the deal that strengthens verification measures for people getting subsidies under Obamacare, spokesman Jay Carney said.

Carney called the change “a modest adjustment,” and said it didn’t amount to “ransom” for raising the federal debt ceiling because both sides agreed to it and the White House supported it.

In addition, the Senate agreement would set up budget negotiations between the House and Senate for a long-term spending plan.

McConnell fired an opening salvo for those talks, expected to begin soon and continue until December, when he said any ensuing budget deal should adhere to spending caps set in a 2011 law that included forced cuts known as sequestration.

“Preserving this law is critically important to the future of our country,” McConnell said of the Budget Control Act, which resulted from the previous debt ceiling crisis in Washington.

The focus on an agreement shifted to the Senate after House Republicans failed on Tuesday to come up with a plan their majority could support, stymied again by demands from tea party conservatives for outcomes unacceptable to Obama and Senate Democrats, as well as some fellow Republicans.

Cruz, despite being in the Senate, is credited with spearheading the House Republican effort to attach amendments that would dismantle or defund the health care reforms known as Obamacare to previous proposals intended to end the shutdown.

All were rejected by the Democratic-led Senate, and Obama also pledged to veto them, meaning there was no chance they ever would have succeeded.

Republican Sen. Kelly Ayotte of New Hampshire called the House GOP tactic of tying Obamacare to the shutdown legislation “an ill-conceived strategy from the beginning, not a winning strategy.”

However, Republican Rep. Steve King of Iowa advocated continued brinksmanship to try to change Obamacare, which conservatives detest as a big-government overreach.

“If we’re not willing to take a stand now, then when will we take this stand?” he told CNN’s “New Day,” adding that if “the conservative Republican plan had been implemented five years ago, say at the inception of what is now the Obama presidency, we would have far less debt and deficit.”

Warnings of default

Despite warnings by Obama and economists that a U.S. default would spike interest rates and could have catastrophic impacts at home and abroad, King said he’s not too concerned if the government passes Thursday’s deadline to raise the borrowing limit.

“It’s just a date they picked on the calendar,” he said, adding that the government will still be able to pay the interest on its debt. “I’m more concerned about market reaction than I am of default itself.”

Thursday marks the day the Treasury Department will run out of special accounting maneuvers to keep the nation under the legal borrowing limit. From that point on, it will have to pay the country’s incoming bills and other legal obligations with an estimated $30 billion in cash, plus whatever daily revenue comes in.

The White House had said that the U.S. would lose its borrowing authority on Thursday, leaving it only with cash on hand to pay bills and therefore at risk of default. Carney clarified Wednesday that the borrowing authority would continue through Thursday.

The expectation is that the Treasury will be able to pay bills in full for a short time after Thursday, but exactly how long remains unclear. According to the best outside estimates, the first day the government will run short of cash could come between October 22 and November 1.

Officials warn that an unknown is whether creditors such as foreign countries that traditionally roll over their U.S. bond holdings could decide to instead cash out, creating a potentially major payout that the government would lack funds to fulfill.

A break from tradition

If the Senate passes the agreement as expected, the House vote will likely consist of most or all of the chamber’s 200 Democrats joined by some — but not a majority — of their Republican colleagues in supporting it. At least 20 or so Republicans would have to back the Senate plan for it to pass.

Slow process

Any delay in the legislative process could result in the nation running out of its borrowing authority.

While tax revenues will continue to stream in, that money will be enough to pay only part of the government’s obligations over time. The impact is unclear in the immediate short term, but over days and weeks, it would mean that government officials would have to pick and choose which bills to pay and which to leave for another day.

The prospect of the U.S. government running out of money to pay its bills and, eventually, finding it difficult to make payments on the debt itself, has economists around the world prophesying dire consequences.

Mutual funds, which are not allowed to hold defaulted securities, may have to dump masses of U.S. treasuries.

Ratings agency Fitch fired a warning shot Tuesday that it may downgrade the country’s AAA credit rating to AA+ over the political brinksmanship and bickering in Washington that have brought the government to this point.

That could help raise interest rates on U.S. debt, putting the country deeper into the red.

Rating agency Standard & Poor’s cut the U.S. credit rating from AAA to AA+ after the 2011 debt ceiling crisis. Moody’s still has the U.S. rated AAA.

Investors around the world appeared to be sitting on the sidelines Wednesday waiting out the day’s debate.

Asian markets ended with mixed results, European markets were down slightly Friday afternoon and U.S. stock futures — frequently taken as an indicator for how U.S. markets will open — were up marginally before trading began Wednesday.

Emergency brake?

Some scholars have suggested that the 14th Amendment to the Constitution gives Obama an emergency brake to stop the default by ignoring what Congress does and borrowing in spite of having reached the debt ceiling.

Section 4 of the amendment states: “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

Obama has rejected such claims, the Congressional Research Service has said. And other scholars say that by invoking the 14th Amendment in this way, the President would risk breaking other laws.

But the same scholars who say this say they believe that section 4 was formulated to keep politicians from holding the debt hostage in order to impose their political will on the natio

Muddled plan

Disarray among House Republicans caused confusion on Tuesday, with Boehner having to pull a proposed agreement from the floor because conservatives found it too weak.

The House proposal dropped some provisions on Obamacare but prohibited federal subsidies to the President and his administration officials as well as federal lawmakers and their staff receiving health insurance through the Affordable Care Act programs.

It also would have forbidden the Treasury from taking what it calls extraordinary measures to prevent the federal government from defaulting as cash runs low, in effect requiring hard deadlines to extend the federal debt ceiling.

House Democrats opposed the GOP proposal, which meant it couldn’t pass without support from the 40 or so tea party conservatives, who wanted more spending cuts.

“It just kicks the can down the road another six weeks or two months,” said Rep. Joe Barton, R-Texas.

House Majority Leader Eric Cantor referred to the GOP infighting at Wednesday’s caucus meeting, telling his Republican colleagues to stop beating up on each other, according to participants. Describing Cantor as impassioned, they said he implored the caucus to avoid characterizing each other as good or bad Republicans.

Time running out

Obama met Wednesday with Treasury Secretary Jack Lew, who has been looking for creative ways to cover U.S. financial obligations as the debt ceiling comes down.

On Tuesday, Obama called for House Republicans to “do what’s right” by reopening government and ensuring the United States can pay its bills. “We don’t have a lot of time,” he said.

But he acknowledged Boehner’s difficulty in getting his fellow House Republicans on the same page.

“Negotiating with me isn’t necessarily good for the extreme faction in his caucus,” Obama said, referring to the tea party and its conservative allies. “It weakens him, so there have been repeated situations where we have agreements. Then he goes back, and it turns out that he can’t control his caucus.”

CNN’s Ben Brumfield, Greg Botelho, Michael Pearson, Paul Steinhauser, Ashley Killough, Craig Broffman, Jim Acosta, Dana Bash, Deirdre Walsh, Mark Preston, Dan Merica, Brianna Keilar and Janet DiGiacomo contributed to this report.

Advertisement