Wrapping up weeks of bitter fiscal fight that had rattled the financial market, U.S. Congress late Wednesday night passed a legislation to end government shutdown and raise the debt ceiling. Although the bill temporarily stitches fiscal difference between the two parties, it also sows the seeds of another fight in the near future.
TEMPORARY FIX
With only one day away from the Thursday deadline, both chambers of the Congress finally approved a short-term deal. The House voted 285-144 to back the measure which earlier cleared the Senate in a solid bipartisan vote of 81-18.
The deadlock was broken Wednesday morning as a deal emerged from the Democratic-controlled Senate. Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell announced on the Senate floor the bipartisan compromise.
The deal was crafted after a chaotic day as the House GOP leaders scrambled to cobble together a deal, which turned out to be a failure due to lack of support from their rank-and-file members. As efforts in the House balked, Senate leaders resumed their talks to broker a deal.
The legislation would lift the debt ceiling through Feb. 7, and allow the Treasury to deploy emergency measures to avoid default for a period of time after that date. It would fund the government through Jan. 15 and provide back pay for furloughed federal workers who were forced to stay home during the government shutdown.
The deal also requires establishment of a joint committee which should try to reach a broader budget deal by mid-December. The 2010 health care law, commonly known as Obamacare, was kept practically intact.
Speaking shortly after the Senate vote, Obama thanked leaders from both parties for working out an agreement to end the government shutdown and raise the debt ceiling.
"Hopefully next time it won't be in the 11th hour," he said. "We've got to get out of the habit of governing by crisis."
UNFINISHED BATTLE
The deal, which staved off a default, offers only a temporary fix and does not resolve the fundamental divide between Republicans and Democrats on spending and deficits.
Republicans, who dropped their demand to link the spending measure to changes or delays in Obamacare, didn't drop the battle.
House Speaker John Boehner said Wednesday afternoon that they would not block the bipartisan agreement reached in the Senate but would continue the fight.
"The House has fought with everything it has to convince the president of the United States to engage in bipartisan negotiations aimed at addressing our country's debt and providing fairness for the American people under ObamaCare," said Boehner in a statement.
"Our drive to stop the train wreck that is the president's health care law will continue," he added.
SHOWDOWN TOOK ITS TOLL
After the House vote, Director of the Office of Management and Budget announced that the federal government would reopen and the federal employees should expect to return to work. About 800,000 federal employees were furloughed as negotiations over the partial government shutdown dragged on, though some were later called back to work.
In a statement released Wednesday, rating agency Standard & Poor's said more than two-week-long government shutdown has cost the economy at least 24 billion dollars, shaving 0.6 percent off annualized fourth-quarter growth. It lowered its forecast for the fourth quarter growth closer to 2 percent from 3 percent.
S&P noted that the current temporary deal only funds the government through Jan. 15 and allows the government to keep borrowing until Feb. 7, suggesting the same economic wound this fiscal fight inflicted will be a threat again in relatively short period of time.
"The short turnaround for politicians to negotiate some sort of lasting deal will likely weigh on consumer confidence, especially among government workers that were furloughed," it said.
"If people are afraid that the government policy brinkmanship will resurface again, and with it the risk of another shutdown or worse, they will remain afraid to open up their checkbooks. That points to another Humbug holiday season."
