WASHINGTON – Congressman Adam Kinzinger (R-Channahon) (Wednesday) supported bipartisan legislation to reopen the federal government and raise the nation’s borrowing limit, also known as the debt ceiling. The legislation, passed only hours before the United States ran out of borrowing authority, averts a potentially significant shock to an already fragile economy. Kinzinger released the following statement:
“House Republicans fought to the brink to protect hardworking Americans from the higher premiums and reduced coverage that Obamacare is already forcing on them. However, surpassing our debt threshold would be incredibly damaging to our already weak economy and harm millions of Americans who are struggling just to make ends meet. Simply put, I am not willing to put the entire American economy at risk to dismantle a law that is already crumbling before our eyes.
“While I have expressed my reservations about certain strategic decisions in this fight, it is undeniable that House Republicans are committed to restoring fiscal sanity to Washington, including maintaining the reduced spending levels that we fought so hard for in 2011. Though Republicans and Democrats have very different ideas on how to get our economy up and running again, I am hopeful that future negotiations will be serious and constructive discussions about how to rein in spending and get millions of Americans back to work.”
The bill, H.R. 2775, opens the federal government after a partial shutdown lasting 16 days and provides back pay to the thousands of federal employees who were furloughed during the shutdown. Additionally, the bill requires more stringent income verification for health care subsidies offered in the President’s health care law, an issue that has raised concern over the potential for widespread abuse.
As part of the legislation, members of the House and the Senate will form a bicameral budget conference committee to work out the differences between the two chambers’ respective budgets, which were passed earlier this year. The House and the Senate have not formed a joint conference on a budget since 2009, diminishing Congress’ ability to adequately prioritize taxpayer dollars.
Background on the Debt Limit:
Because the United States continues to operate on a deficit, the federal government is required to take out loans to meet its obligations. These obligations represent spending that has already been enacted into law and include Social Security and Medicare payments to seniors, payments to troops and veterans, and interest payments on the debt.
According to the US Treasury, the government was set to hit its borrowing limit on October 17, 2013, meaning it would no longer have the funds necessary to pay all its obligations. Economists and government officials from across the political spectrum warned that failing to increase the government’s borrowing limit would cause a default on U.S. debt, disrupting world economies and threatening to push the United States back into recession. H.R. 2775 avoids this scenario and ensures the United States can meet its obligations.
Below are some predictions from mainstream economists on the dangers of defaulting:
If we miss an interest payment, that would blow Lehman out of the water. Lehman was an isolated company, and now we are talking about the U.S. government.
(Tim Bitsberger, former Treasury official under President George W. Bush, “ A U.S. Default Seen as Catastrophe Dwarfing Lehman’s Fall
,” Bloomberg, 10/7/2013)
Defaulting on any obligation of the U.S. government would be a dangerous gamble. In a very uncertain world, the one thing everyone has been able to count on is that the U.S. government will pay its bills on time.
(Doug Elmendorf, Director of the Congressional Budget Office, “ Default on some U.S. bills would be 'dangerous gamble': CBO chief
,” Reuters, 9/26/2013)
Consumer confidence plunged during 2011's debt ceiling fight to a low not seen since the dark days of the recession, and it took a long time for confidence to recover.
(Michael R. Strain and Stan A. Veuger, American Enterprise Institute resident scholars, “ Don’t wait on the debt limit
The potential is disastrous. We would see interest rates spike across the board. We'd see a huge crash in the dollar. People count on lending their money to the federal government and getting it back, and if that trust is taken away -- it's never happened that we haven't met our obligations as a nation -- then that has very, very negative consequences for the U.S. economy.
(Gus Faucher, senior economist with PNC Financial Services Group, “ Debt Ceiling: Understanding what’s at stake
,” CBS News, 10/7/2013)
Whatever circumstances and disagreements got us to this current unhappy juncture, there is no way that our government leaders can allow the full faith and credit of the United States of America to be jeopardized. This is an issue that affects every single citizen, from veterans to Social Security recipients to government bondholders to all taxpayers, and threatens to derail an already fragile economic recovery.
(James P. Gorman, chief executive of Morgan Stanley, “ No Way U.S. Would Allow Debt Default? Don’t Bet on It
,” New York Times, 10/7/2013)
If there is that degree of disruption, that lack of certainty, that lack of trust in the U.S. signature, it would mean massive disruption the world over. And we would be at risk of tipping, yet again, into recession.
(Christine Lagarde, International Monetary Fund Managing Director, “ Meet the Press
,” NBC, 10/13/2013)