House Republicans threaten shutdown of federal government unless Obamacare is de-funded
Gearing up for a repeat of the fiscal battles that brought the federal government to the brink of shutdown and resulted in the unprecedented downgrade of the U.S. credit rating in 2011, House Republicans announced this morning their intention to proceed with a continuing resolution that would fund the federal government past Oct. 1st but on the conditions that the 2009 health care reform is repealed and the across-the-board sequester cuts are locked in.
“This year is not going to be any different,” said House Speaker John Boehner (R-Ohio), who claimed it is not uncommon for lawmakers to use the threat of U.S. default as leverage to impose steeper budget cuts.
House Republicans also threatened to withhold raising the debt limit, which would force the Treasury to default on paying the debts and obligations incurred by Congress, unless President Barack Obama agrees to de-fund the Affordable Care Act, to impose more spending cuts, to approve the Keystone pipeline, and to enact other tax “reforms” that would likely involve rate cuts.
“In the coming week, we will unveil a plan to extend our nation’s ability to borrow while delaying Obamacare and protecting working middle-class families from its horrific effects,” said House Majority Leader Eric Cantor (R-Va.).
House Republicans have tried 40 times to repeal the Affordable Care Act, which has been upheld by the U.S. Supreme Court. President Barack Obama said that he is “more than willing to work” with Republicans on “specific suggestions” to improve the ACA but that he will not repeal the entire health care reform law.
Federal Reserve Chairman Ben Bernanke warned that government shutdown or default will hurt the economy and that the Federal Reserve has “very limited” tools to mitigate those “serious” adverse impacts given that interest rates are already at historical lows of 0% to 0.25%.
“It is the case, I think, that a government shutdown and, perhaps even more so, a failure to raise the debt limit could have very serious consequences for the financial markets and for the economy,” said Bernanke. “Our ability to offset these shocks is very limited, particularly a debt limit shock. And I think it’s extraordinarily important that Congress and the administration work together to find a way to make sure the government is funded, public services are provided, that the government pays its bills, and that we avoid any kind of event like 2011, which had – at least for a time – a noticeable adverse effect on confidence and on the economy.”
Treasury Secretary Jack Lew informed Congress that the Treasury Department will “exhaust” its “extraordinary measures” to avoid default by mid-October unless the debt ceiling is raised.
“The debt limit has nothing to do with new spending. It has to do with spending that Congress has already approved and bills that have already been incurred. Failing to raise the debt limit would not make these bills disappear,” said Lew. “If Congress fails to act and those measures are exhausted, we will have to use what cash balances we have on hand to fund the operations of a nearly $4 trillion government. At that point, meeting our nation’s financial obligations—including Social Security and Medicare benefits, payments to our military and veterans, and contracts with private suppliers—will be put at risk.”
Obama accused the Republicans of trying to use the health care law repeal to score political points but at the expense of the U.S. economy.
“You have some Republicans in the House of Representatives who are promising to shut down the government at the end of this month if they can’t shut down the Affordable Care Act. And if that scheme doesn’t work, some have suggested they won’t pay the very bills that Congress has already run up, which would cause America to default on its debt for the first time in our history and would create massive economic turmoil. Interest rates on ordinary people would shoot up. Those kinds of actions are the kinds of actions that we don’t need,” said Obama. “After all that we’ve been through these past five years, after all the work Americans like those standing behind me have done to come back from the depths of a crisis, are some of these folks really so beholden to one extreme wing of their party that they’re willing to tank the entire economy just because they can’t get their way on this issue? Are they really willing to hurt people just to score political points? I hope not.”
Obama maintained that he will not negotiate the debt limit increase this time around.
“I will not negotiate over whether or not America keeps its word and meets its obligations. I will not negotiate over the full faith and credit of the United States. This country has worked too hard for too long to dig out of a crisis just to see their elected representatives here in Washington purposely cause another crisis,” said Obama. “Let’s stop the threats. Let’s stop the political posturing. Let’s keep our government open. Let’s pay our bills on time. Let’s pass a budget. Let’s work together to do what the American people sent us here to do: create jobs, grow our economy, expand opportunity. That’s what we need to do.”
- WhatTheFolly.com: Transcript: House GOP announces continuing resolution will lock in sequester cuts & de-fund Obamacare
- WhatTheFolly.com: Transcript: Remarks by President Barack Obama on the 5-year anniversary of the financial crisis
- WhatTheFolly.com: Transcript: Treasury Secretary Jack Lew’s speech at the Economic Club of Washington
- WhatTheFolly.com: Transcript: Remarks by CBO Director Douglas Elmendorf on the 2013 long-term U.S. budget outlook
- WhatTheFolly.com: U.S. debt ceiling timeline 2011