The United States avoided the fiscal brink – again.
With the Treasury Department only hours away from exhausting its legal ability to issue debt, the Republican resistance to President Barack Obama’s health-care law relented, clearing the way for an end to Washington’s weeks-old budget impasse.
Financial markets were calmed, and could enter a period of buoyancy now that the threat of an unprecedented default by the world’s largest economy has been lifted.
Democratic Senate Majority Leader Harry Reid and Republican Minority Leader Mitch McConnell finished compromise legislation Wednesday morning, which Senators passed 81-18. The unpredictable and fractious House of Representatives endorsed the measure 285 to 144 in a vote that ended just after 10 p.m. Fewer than 90 Republicans joined 198 Democrats in casting 'yes' votes, a blow to House Speaker John Boehner, who has made a point of commanding his majority to pass the legislation he puts on the chamber floor. All Democatic congressmen and congresswomen voted in favour.
After meeting with his Republican majority Wednesday afternoon, Mr. Boehner conceded defeat, saying he wouldn’t get in the way of the Senate proposal.
The Reid-McConnell bill would restore the federal government’s spending authority until January; lift the debt ceiling until early February; and establish formal negotiation between both chambers of Congress on spending levels and tax rates.
Stock markets in New York surged and Mr. Obama swiftly endorsed the plan. Hurdles to relatively speedy passage through the legislative gauntlet fell. Ted Cruz, the Texas senator who led the campaign against Obamacare, said he would forgo the use of procedural delays.
“We fought the good fight,” Mr. Boehner told a radio station in Cincinnati, Ohio. “We just didn’t win.”
The end of the shutdown raises at least as many questions as it resolved. The threat of economic calamity from default was removed, at least until early next year.
But the strong bipartisan endorsement of a solution that did little but push forward two deadlines for another two months invites two questions: What was it all for, and what will keep it from happening again? Mr. Boehner and his party’s restive Tea Party faction also will be under the microscope, as it was unclear whether the events of the past few weeks strengthened Mr. Boehner’s control of his caucus, or weakened him in the eyes of hard-liners who put “principle” ahead of pragmatism.
Some 800,000 furloughed federal workers will go back to work and services such as mandatory inspections will be restored. IHS Global Insight, a research firm, estimates the 16-day loss of non-essential services cost the U.S. economy $3.1-billion (U.S.) in lost services, a blow, but not a devastating one.
“This was pain inflicted on a nation for no good reason,” Mr. Reid said at a press conference Wednesday night. “We cannot make the same mistake again.”
Mr. Obama reinforced that message, calling on Congress to repeat the spirit of co-operation it discovered in recent days to tackle stalled bills on immigration and agriculture and to pass its first full-year budget in years.
“We have to get out of the habit of budgeting by crisis,” he said.
Mr. Obama, Mr. Reid and other Democratic leaders could have declared victory. Unlike previous showdowns with the Republicans, they refused to give ground, characterizing their opponents as ransom takers and extortionists. The tactic worked. The only condition attached to the Reid-McConnell bill was a commitment to make sure applicants for Obamacare subsidies really need the financial help.
But there was no visible rejoicing in the Democratic ranks. While polls show the broad public blames Republicans for the shutdown, they also show that faith in government broadly is disconcertingly weak. A Gallup survey this week put “dysfunctional government” ahead of the U.S.’s sluggish economy as the country’s most pressing problem.
Charles Schumer, a Democratic senator from New York, called it a “sombre day.” Jeff Merkley, a Democratic senator from Oregon, tweeted that Congress fulfilling its “most basic duties” isn’t a “cause for celebration.”
Patty Murray, the Democratic head of the Senate budget committee, and Paul Ryan, her Republican counterpart in the House, announced they would meet for breakfast Thursday to begin talks on a budget. Cameras will be invited.
It will take more than symbolic gestures to reverse the cynicism that now greets most of what Washington does. “I certainly don’t think so,” said Stan Veuger, a policy analyst at the American Enterprise Institute, said when asked if he thought a new era of bipartisanship was at hand.