The Senate on Thursday voted to temporarily suspend the debt ceiling until May, and to withhold lawmakers’ pay if Congress cannot agree on a budget by April 15.
The No Budget No Pay bill (H.R. 325) would authorize a temporary suspension of the current debt limit of $16.4 trillion through May 18, allowing the government to continue borrowing to pay its bills until then. A provision in the legislation would prohibit lawmakers from getting paid if Congress fails to pass a fiscal 2014 budget by April 15. Salaries would be held in escrow until lawmakers agreed on a fiscal 2014 budget; if Congress fails to do so, then salaries would resume in January 2015, the end of the current congressional session.
The House passed the bill last week. The legislation now heads to President Obama who has said he would sign it.
The Bipartisan Policy Center estimated that the short-term extension measure would increase the debt limit by about $450 billion. The center also said it likely would be August before the debt ceiling has to be raised again, and could even be later. “Part of the reason that extraordinary measures will last longer this time around is that significant additional extraordinary measures become available on June 30 that will allow Treasury to raise additional cash to meet its obligations,” according to an analysis on BPC’s site.
One of the extraordinary measures that the government often has used to avoid a default is tapping into and suspending investments into the Civil Service Retirement and Disability Fund and halting the daily reinvestment of the G Fund, the most stable offering in the Thrift Savings Plan's portfolio. The law requires the Treasury secretary to refill the coffers of the G Fund and the Civil Service Retirement Fund once the issue of the debt ceiling is resolved, and in addition, to make up for any interest lost on those investments during the suspension.
Regarding the provision on congressional pay, there was some dispute over whether it passed muster. The 27th Amendment to the U.S. Constitution prohibits a sitting Congress from increasing or decreasing its own pay, although it can change the pay of future legislative bodies. Supporters of the provision argue that placing salaries in escrow does not change the rate of lawmakers’ pay, and therefore is constitutional. Rank-and-file lawmakers earn an annual salary of $174,000 while party leaders make more. Some lawmakers have said they could not afford a pay delay.
Senators offered several amendments to the bill, all of which failed. Republican Rob Portman of Ohio tried to push a measure which would have mandated “dollar for dollar” spending cuts to offset any future increases in the debt limit. Lawmakers also rejected a Portman amendment that would have avoided government shutdowns and resulting furloughs through an automatic temporary spending measure to keep agencies running if Congress can’t pass appropriations bills by Oct. 1, the start of the fiscal year. That measure also would have imposed spending cuts of 1 percent after 120 days under the stopgap mechanism, and an additional 1 percent every 90 days thereafter if Congress failed to pass a budget. Maryland Democrat Barbara Mikulski, who has many federal employees in her state, objected to the measure, saying it would amount to a “series of mini-sequesters.”
Sen. Pat Toomey, R-Pa., also offered an unsuccessful amendment that would have forced the government to prioritize spending in the event of a default. That measure would have guaranteed paychecks to active-duty military and Social Security benefits to retirees if the government defaulted.