The legislation would suspend the debt limit through May 18, 2013, when the current $16.4 trillion debt ceiling would be automatically increased to cover additional debt accrued in the interim. The passage of this bill would give Congress three more months to determine a second increase to the debt limit in 2013, allowing Congress to focus on sequestration and fiscal year (FY) 2013 appropriations.
However, the bill increases the likelihood of sequestration, across-the-board cuts to discretionary programs that would have a devastating impact on homelessness assistance, taking effect on March 1, 2013.
The debt ceiling will no longer serve as an incentive for Congress and the President to make a longer-term budget deal before sequestration takes place, and many observers question whether sequestration will in itself be enough to motivate the kinds of compromise that would be necessary.
“The sequester is going to go into effect on March 1 unless there are cuts and reforms that get us on a plan to balance the budget over the next 10 years. It’s as simple as that,” House Speaker Boehner said.
Although the Senate has not yet passed the debt ceiling suspension bill, President Obama has indicated that he would sign it.