Wednesday, September 25, 2013 3:28 am
Highlights of twin fiscal deadlines facing govt
By The Associated Press
Without passage of a temporary spending measure known as a continuing resolution, federal spending authority for agencies will expire Oct. 1, the beginning of the new fiscal year. That means nonessential programs would shut down and hundreds of thousands of federal employees would stay home. But other functions, broadly defined as being essential to the preservation of life or property, would continue, including defense, air traffic control and patrolling the border, as would so-called mandatory programs like Social Security, Medicare, Medicaid and most elements of the Affordable Care Act, the health care law also called "Obamacare."
The House last week passed a continuing resolution that would keep the government running through Dec. 15, coupled with provisions to derail implementation of the health care law and require the Treasury Department to prioritize payments in the event the government runs out of cash and borrowing authority and can't pay all of its bills. Social Security benefits and interest payments on U.S. Treasury securities would be given priority.
DEBT LIMIT INCREASE
The Treasury Department says the government will exhaust its borrowing authority in mid-October and be left with about $50 billion in cash, which will last perhaps two weeks before the government runs out of the ability to pay its bills in full and on time. The government has never defaulted on its obligations, and the possible consequences are dire: upheaval in financial markets, a spike in U.S. borrowing costs and a host of delayed payments to individual Americans and businesses.
While the Treasury Department probably would make interest payments to bondholders to prevent a catastrophic default on the debt, it wouldn't be able to make other payments on time, which would mean delays in Social Security benefits and in paychecks for federal workers and troops in the field.
President Barack Obama says he won't negotiate with Republicans over the debt limit as he did two years ago. House Republicans are instead preparing a debt limit increase that would raise the debt limit for more than a year, with a variety of GOP legislative priorities attached.
Details aren't public and are subject to changes, but GOP leaders are likely to add a one-year delay in implementation of the health care law, a mandate for government approval of the Keystone XL pipeline, and a series of generally small budget cuts, like reducing the government's contribution to federal employee retirement plans.