Congress had until Sept. 30 to raise the debt limit to avoid a partial government shutdown. (Chip Somodevilla/Getty Images)
Confused by all the crazy ups and downs of Washington over the government shutdown and debt ceiling? Here’s a five-minute primer on what’s happening.
What’s going on right now?
Democrats and Republicans in the Senate are in a mad dash to finalize a deal to reopen the government and avoid breaching a Thursday deadline to raise the federal debt ceiling. (The debt ceiling is scary and gets its own primer here.)
When will they reach the deal?
What will the deal involve?
Details are still up in the air, but it’s likely to have a four main elements:
– Reopen the government and fund it through Jan. 15, 2014.
– Raise the debt limit through Feb. 7, 2014, but allow federal borrowing to continue for a few weeks longer.
– Require additional measures, favored by Republicans, to ensure that people who receive financial help in buying health insurance under President Obama’s Affordable Care Act are being honest about their income.
– Set up a negotiating committee to try to come up with a longer-term budget plan so we don’t go through this again early next year. The committee would be expected to issue budget recommendations by Dec. 13. Should it fail, agencies would have more flexibility to implement the deep cuts to domestic and Pentagon spending, known as sequestration, that took effect earlier this year.
When would the government open and the crisis be over?
As soon as both houses of Congress pass the deal and President Obama signs it.
When will the deal pass the Senate?
A deal could be passed as soon as Wednesday if all senators agree. If a single senator refuses to allow an immediate vote on the measure (looking at you, Ted Cruz), it could take several days. Cruz is reportedly being pressured by his Republican colleagues not to hold up any vote.
Will the deal pass the House?
Hard to say. When a Senate deal was progressing on Tuesday, House Speaker John A. Boehner (R-Ohio) unveiled his own proposal that nearly undermined all the movement in the Senate. But that effort failed, and Boehner has in the past allowed a vote on critical legislation when he is facing a deadline. Any Senate measure would likely pass the House with the support of most Democrats and a substantial number of Republicans.
That sounds pretty uncertain to me.
How long do lawmakers have to get the deal done?
It really should get done by Thursday. That’s when the government no longer can borrow any money and basically will be running on fumes. That’s the day we hit the debt ceiling deadline.
After the debt ceiling deadline is breached, there might be a couple of days, or even a week, of breathing room, as the Treasury Department uses up whatever’s left in the federal piggy bank.
But soon enough, there won’t be enough money to make all payments, and the Treasury might have to delay or suspend Social Security checks, food stamps and tens of billions of dollars in payments. In effect, the government would begin defaulting on its obligations.
Treasury would have only daily tax receipts to pay for the government, which amount to only 70 cents for every dollar of federal spending over the next month. And that could cause financial market chaos and a recession.
It sounds like the world doesn’t actually end tomorrow if Congress takes more time to figure things out.
That’s correct — at least due to a government default. There could always be a massive asteroid or alien invasion that does end the world.
Be serious. What is the precise date when Congress has to act to make sure we avoid lots of economic problem?
The sooner the better, but we don’t have an absolute fixed date. Federal finances tend to be unpredictable. Markets could freak out at any time, though we can’t say with certainty when that will happen.
Assuming this deal makes it through, who’s won and who’s lost?
He can be giddy. But just a little. (Photo by Mark Wilson/Getty Images)
What a simplistic way of thinking about things! But since you asked, it seems pretty clear in this round of the budget wars, President Obama and the Democrats will have outmaneuvered their Republican opponents.
House Republicans decided to shut down the government in hopes of major changes t othe health-care law. None is in the offing.
Senate Republicans reluctantly went along with that strategy — at least for a while. In the meantime, the GOP brand was badly beaten up in the polls.
Prognosticators now guess that Republicans could have a very hard time winning the Senate in 2014 – even though the electoral map is stacked against the Democrats. But the House still looks safe for the GOP.
Meanwhile, Obama and Democrats stayed firm to their view that they would not pay a “ransom” in order to accomplish the basic tasks of keeping the government open and raising the debt limit.
Hold up one second. Hasn’t Obama been forced to compromise to raise the debt ceiling and open the government?
Not really. Obama is giving the flimsiest of fig leaves to the Republicans — a promise to do a better job ensuring that people who report their income to get help buying health insurance under the health-care law are actually reporting their income properly. There were already some assurances in the health-care law, so all the president is promising is an additional layer of scrutiny.
So is it all wonderful for Obama and Democrats?
Nope. The truth is that for all the drama, they’re getting little out of this deal. They don’t roll back the deep spending cuts known as sequester — a policy that is eating away at domestic priorities like education and research and development. They don’t get new money to spend on jobs or an immigration bill.
They just get a political win. And they avoid an economic disaster.
Once this crisis is over, what happens next?
Well, per the outlines of the agreement, both Republicans and Democrats would assign lawmakers to a committee to hash out a broader budget plan for the coming year. These joint efforts have not had success in the past, and we’ve gone years without a formal budget.
But hope dies hard. For Democrats and Republicans alike, the basic question in the committee will be whether they find a way to roll back the sequester, which is due to launch a new round of budget cuts in January.
Democrats hate the sequester, because it’s basically the opposite of the vision of domestic investment they’ve long campaigned on. Republicans are more ambivalent, but there are many in the GOP who don’t like how deeply it cuts Pentagon spending.
The most likely path to replacing part of the sequester is to make cuts to mandatory spending — like healthcare programs or farm subsidies — instead. On a practical level, Republicans and Democrats agree that mandatory spending is better to cut since it’s the long-term driver of our debt. But mandatory spending has pretty entrenched constituencies — such as the elderly or farmers — which makes such cuts difficult to achieve.
A bigger budget deal — the elusive “grand bargain” — could also be considered as part of the conference. But any discussion of significant changes to mandatory spending usually leads Democrats to insist on new taxes, which has been a deal-breaker for the GOP.
What happens if the committee fails to come to an agreement and we’re back in January with new deadlines?
Most likely, neither side will want a new fight over government funding or the debt ceiling with the mid-term elections fast approaching. So they’ll just extend everything once again, leaving (albeit more flexible) sequester cuts in place, and the voters will decide what they want come November.
Like that’s worked well in the past.