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The Debt Ceiling Looms Over Budget Showdown
Originally published on Sun October 6, 2013 11:14 am
RACHEL MARTIN, HOST:
This is WEEKEND EDITION from NPR News. I'm Rachel Martin. The federal government has been partly shut down for nearly a week now. And there's no sign lawmakers are any closer to a deal to reopen it. Some key government employees have been called back to work. Most civilians at the Defense Department and FEMA crews needed to deal with Tropical Storm Karen. But a broader solution may have to wait until the middle of this month, when Congress faces another deadline - to raise the government's debt ceiling. NPR's Scott Horsley joins us now to talk more about this. Hi, Scott.
SCOTT HORSLEY, BYLINE: Hi, Rachel.
MARTIN: So, U.S. Treasury Secretary Jack Lew has been doing the rounds on the Sunday talk shows this morning. What is he saying?
HORSLEY: Well, you know, the federal government spends more every year than it takes in. And it has to put the difference on its credit card. And you've got a limit on your credit card, Rachel; so does the federal government. It's set by Congress. The government's limit's probably a little bigger than yours - probably. It's just under $17 trillion. But we're bumping up against it. And the Treasury secretary's been saying for some time now that the government's going to run out of borrowing authority no later than Oct. 17th.
And once that happens, it's like having to get through the day with just the cash you have in your wallet. It might not be a problem on the 17th, might not be a problem on the 18th. But within a few days, the government's going to get a bill it can't pay. And Lew said on CNN this morning, that's uncharted territory.
(SOUNDBITE OF CNN TV NEWS SHOW)
SECRETARY JACK LEW: We've never gotten to the point where the United States government has operated without the ability to borrow. It's very dangerous. It's reckless because the reality is, there are no good choices if we run out of borrowing capacity and we run out of cash. It will mean that the United States, for the first time since 1789, would be not paying its bills - hurting the full faith and credit because a political decision.
HORSLEY: The last time we even came close to this - back in 2011 - the stock market tanked, consumer confidence took a beating, the government lost its AAA bond rating, and hiring stalled.
MARTIN: But you mentioned 2011, Scott. But didn't we just go through this? Didn't we just have this debate just a couple of years ago? If this is so crucial, why is it repeatedly going down to the wire?
HORSLEY: Well, because this is such a must-do action for Congress. This is a powerful point of leverage for congressional Republicans - or at least, some in the party see it that way. And you know, Republicans don't have a lot of other leverage these days. They suffered a setback in the 2012 election. So some in the party see this as their best opportunity to force the president to blink. Now, Obama sees that as a dangerous habit - to let one faction of one party to hold the government hostage like that. So he's taken a very hard line.
PRESIDENT BARACK OBAMA: There will be no negotiations over this. The American people are not pawns in some political game. You don't get to demand some ransom in exchange for keeping the government running. You don't get to demand ransom in exchange for keeping the economy running...
HORSLEY: Obama says he's willing to talk with Republicans about a long-term budget deal - maybe even about changes to Obamacare - but only after they reopen the government, and they vote to raise the debt ceiling.
MARTIN: OK. The likelihood Republicans will do that?
HORSLEY: Well, House Speaker John Boehner reportedly has told fellow Republicans that he won't let the government default; suggesting that if we get close enough to the deadline without an agreement, he'll bring a bill to the House floor to raise the debt ceiling over the objection of the most conservative Republicans - assuming it would pass with a mix of less-conservative Republicans and Democrats. Now, that's the same coalition that would likely vote to reopen the government.
So one line of thinking is, if you're John Boehner, why take two painful votes when you could take just one? So the vote to reopen government may have to wait until we get closer to that debt ceiling deadline, Oct. 17. Now, for the furloughed federal workers, they did get some good news this weekend. The House voted yesterday to make sure that they get back pay once the government reopens, whenever that might be.
MARTIN: Real quickly, Scott. What happens if all this doesn't work, some of our bills go unpaid?
HORSLEY: Well, it's never happened before, and we don't really know. When other countries have defaulted, it's been because of real financial stress - like a tenant who can't pay his rent because he's lost his job. Our situation is more like a tenant who can't pay his rent because he's having a fight with his girlfriend, and she's put a hold on their checking account. It's possible that the financial markets would be more forgiving in that case, but they might not be. And the view from the White House and Wall Street is, why take the risk of finding out?
MARTIN: NPR's White House correspondent, Scott Horsley. Thanks so much, Scott.
HORSLEY: My pleasure, Rachel. Transcript provided by NPR, Copyright NPR.