Debt Ceiling Crisis Averted

The U.S. Senate passed and President Obama signed emergency legislation today to increase the federal debt limit, barely avoiding a catastrophic default.

The measure was passed 74-26, bringing a sigh of relief for many fearing severe economic consequences across the globe. The Senate vote follows the U.S. House of Representatives' approval of the plan, which passed yesterday by 269 to 161 votes. As expected, members of Northern Virginia's Congressional delegation have mixed feelings on the plan and its passage. 

U.S. Rep. Jim Moran (D-8) wanted the President to reject the plan and invoke the 14th Amendment to raise the debt limit. “Unfortunately, the proposal we are being asked to vote on would be bad for our country. It should be rejected, and President Obama should take matters into his own hands by invoking the 14th Amendment to raise the debt ceiling," he said. "This agreement, unfortunately, validates the political strategy of those Republican radicals who were willing to create default and economic chaos in order to avoid true compromise and a balanced approach. Their brinksmanship has eroded the global confidence in our system of government, a confidence that made the dollar the global reserve currency and the Treasury Bill the world’s safest investment. (The measure) will have a lasting negative effect on our economy, prevent investment in our infrastructure and weaken our economic competitiveness." 

The measure increases the federal government's previous $14.3 trillion spending limit by $900 billion, and commits more than $2 trillion in budget cuts over the next 10 years. It also creates a bipartisan committee of 12 legislators to negotiate an additional $1.5 trillion in cuts.  

"I was proud to vote last night for the bipartisan debt ceiling compromise," said U.S. Rep. Gerry Connolly (D-11) on a conference call Tuesday morning. "I believe this agreement sort of has something for everyone to love, everyone to hate… I felt very strongly that the choice was between this proposal and a catastrophic default today. Time had run out and I felt there was no other choice...While it may not have been my ideal proposal, I actually think the president got the best deal he possibly could and actually played his hand with great skill. And so, I was pleased to join 95 other Democrats and voted for the proposal, including most of our leadership last night in a very strong bipartisan vote.

"Revenue is on the table. Social Security and Medicare are protected. Pell Grants are protected. If you want to cut more in discretionary domestic spending, you’re going to have to cut defense as well. So, there’s sort of a mutual deterrence here that did not exist in any of the previous proposals," Connolly said.  

Virginia’s AAA credit rating would have suffered under a federal default. “That would have been devastating news that I think now can be avoided, and it will be,” Connolly said. "There are no specifics that we can point to that can say (the legislation) will hurt Virginia, but we do know that if you look at the broad outlines of these numbers, we’re not going to be immune from the implications of these very substantial cuts over 10 years."

On Tuesday morning, House Majority Leader Eric Cantor (R-VA-7) was interviewed by Jimmy Barrett on WRVA Richmond’s Morning News. "The President and his policies have proved detrimental to small businesses, to the middle class in this country and to the entrepreneurs," he said. "If you think about what has built this country, it is the small business people, it is the manufacturers, it is the people who open stores in all the shopping centers around our area, it is the people who innovate and come up with new technology that helps increase productivity and create jobs. Those are the kind of people who don’t have a lot of confidence right now because frankly they don’t know where Washington is going next.” 

Moran said Republicans are holding the country hostage. “At a time of stagnant growth and high unemployment, the far-right of the Republican party has been able to hold our economic security hostage in exchange for deep cuts that will reduce growth and employment and increase inequality in the short term without properly addressing the structural causes behind our long-term deficits," he said. "Government spending currently equals roughly 25 percent of GDP, while revenues being collected are at an historically low 15 percent of GDP. This gap, which represents our yearly deficit, is unsustainable – and despite the rhetoric cannot be bridged by spending cuts alone." 

Congress is divided by more than party lines. "It’s divided along bright ideological lines," Connolly said. "A whole new crowd got elected last November with a very different philosophy of government, a very different view about what constitutes proper actions with respect to the U.S. debt and its obligations. Many of those views, we find... are reckless and are frankly irresponsible, but that doesn’t matter. They’re here and they vote."