Deadlines Spur Action: Congress Strikes a Deal to Avoid Default and Fund Government

Deadlines spur action. Senate leaders on Wednesday struck an 11th hour deal to end the stalemate in Washington. (You can read the entire 35 page deal here.) The Senate voted 81-18 on Wednesday evening to a deal that would end the 16 day government shutdown and allow the government to borrow more money just 24 hours before the debt ceiling was going to be reached. The House also approved the legislation late Wednesday night.

The Senate plan funds federal agencies at current spending levels though January 15th and extends the nation’s borrowing authority through February 7th. A negotiating committee would be charged with creating plans for longer-term fiscal solutions.

I also found these nuggets picking through the bill: furloughed workers get back pay, a former Senator’s widow will get $175,000, and Senate minority leader Mitch McConnell’s home state of Kentucky will get $3 Billion for a dam.

Senate Majority Leader Harry Read said the agreement, “will provide our economy with the stability it desperately needs.” Given the uncertainty of the U.S. credit, markets have been down over the last couple weeks hurting small businesses and investors. Markets rebounded strongly today on news of the impending agreement.

Speaker Boehner signaled the party hasn’t given up on its crusade against the Affordable Care Act, which was the largest sticking point in negotiations on a budget deal. He also articulated that Republicans will continue to fight for additional spending cuts and against tax increases.

House Republicans tried and failed to pass a proposal to end the impasse on Tuesday, but were blocked by Tea Party members. The Senate deal is very similar, but has acceptance from all sides. The Senate deal reflects Republican capitulation, as almost none of the policy gains they had sought were included in the bill. The only “win” for Republicans was the setting of new procedures to verify the incomes of some people receiving government subsidies for health insurance costs. Speaker Boehner may not have won much, but he did keep his word that he would not let the nation default on its debts.

Republican Tea Party members may be patting themselves on the back for standing up for what they believe in and setting in motion the events that led to the government shutdown. They were seeking a repeal of Obamacare and an agreement for significant spending reduction measures. They repeatedly blocked bipartisan bills that would have ended the government shutdown and used the gravity of a potential default to illustrate their opposition to the Affordable Care Act.

The Tea Party certainly made the point they despise the Affordable Care Act, but was it worth it? Speaker Boehner said, We fought the good fight, we just didn’t win.” The term “good” is not appropriate to describe any part of this fight. 

How could it be? In addition to the very real effects the shutdown had an Americans detailed in this post from last week, four deaths at U.S. coal facilities are being attributed to furloughed government inspectors. What did the Tea Party win in the debate? Revised income checking procedures. Was that worth the furloughed workers, nearly a 1.5% drop in the Dow, almost 2% drop in the Nasdaq, and god knows what viruses are on the loose without the CDC working?

Those who place blame solely on the GOP are missing the larger issue. Both sides fought for what they wanted, the Democrats were just less likely to cave given their leverage. President Obama had the power to make small concessions like repealing the medical device tax that would have led to a rapid resolution of the standoff by allowing the Republicans to save face. Unfortunately Democrat leaders couldn’t close a deal with an inept foe. To be clear, both sides are culpable for the hardship this standoff put on Americans.

The issues of the debt ceiling and budget deficit are not gone. They have merely been pushed down the road until January 15th and February 7th. Without rational conversation, the leaders in government are primed to go through this same situation again in three months time using the possibility of default as a bargaining chip.

President Obama said in a statement Wednesday evening, “Now we have an opportunity to focus on a sensible budget that is response, that is fair, that helps hardworking people all across this country.” He went on to say, “We’ve got to get out of the habit of governing by crisis.” That is very true Mr. President. If you’re the leader who can effect that change, history will remember you with exceptional fondness and gratitude.