Whew! Just hours before the US would have been forced to default on debt, the stars aligned in Washington and the House of Representative passed, and President Obama signed a debt ceiling deal developed by the democratic and republican leaders in the Senate that ended 16 days of government shutdown and extensive furloughs of Federal employees. While I do not believe that it really had an impact on the ability of the Senate leadership to strike an agreement, I found it interesting that the salaries of Senate staff would have ended tomorrow, the 18th of October. In my view, the primary factor was that the majority of congressional members wanted to prevent the economic catastrophe and the embarrassment that would have resulted from a default.
Is the problem solved? Is there no longer a risk of another government shutdown? In a few words, things are okay “for now”. Under the agreement, the government will be open until 15 January 2014 and the Secretary of the Treasury will have the authority until 7 February to use extraordinary measures to prevent a default on US debt. The “continuing resolution” (CR) continues government funding at the fiscal year (FY) 2013 levels after the sequestration was implemented (i.e., generally 5 percent less than the FY 2012 program levels). Between now and then, Congress and the President must approve another CR or appropriations legislation to prevent the government from shutting down again.