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Republicans again are threatening to vote against raising the debt ceiling unless Congress cuts spending dollar for dollar to the amount the debt ceiling is raised. Several prominent Republicans have stated they are willing to allow the ceiling to be breached and risk the consequences to the economy.
President Obama says he will not negotiate on raising the debt ceiling and has called on lawmakers to assure that the federal government is able to pay its debts that have already been incurred through Congressional action. Some analysts think the Administration can raise the debt ceiling without Congressional approval if it has to in order to meet the country’s obligations. Several Democratic leaders are encouraging the President to do so.
H.R. 8, the bill passed by Congress at the end of the 112th Congress, postponed the across-the-board cuts to discretionary funds, scheduled for January 1, 2013, until March 1, 2013. Unless Congress acts, the sequester will take effect, resulting in cuts needed to achieve a $1.2 trillion reduction in the deficit over a 10-year period. The Office of Management and Budget estimates that a full-year sequestration would result in 8% cuts to all of the non-defense discretionary accounts. One scenario under discussion is to simply keep postponing the sequester until the political environment improves and less drastic cuts can be negotiated.
Finally, Congress must settle funding levels for the current fiscal year, FY13, which started October 1, 2012. The federal government is currently funded at FY12 levels by a CR that expires on March 27. 2013. H.R. 8 set new spending caps for FY13. Appropriators now report a readiness to move forward with finalizing FY13 funding levels.