SUMMARY: The Senate passed a new budget bill Thursday, delivering a rare bipartisan legislative agreement. But critics say the spending it allocates and its temporary suspension of the debt ceiling represent runaway spending and fiscal irresponsibility. Lisa Desjardins joins Judy Woodruff to discuss the huge numbers at play, who opposed the new budget and the different types of spending it reflects.
SUMMARY: President Trump has sided with Democrats in a deal to tie $7.9 billion in Hurricane Harvey relief to funding the government and raising the debt ceiling. The deal complicates relations with Republicans, who wanted a longer-term fix to the debt ceiling. John Yang unpacks the proposal and what it means for the agenda awaiting Congress with Erica Werner of the Associated Press.
The above is roughly what 8.5 Trillion dollars would look like... and those are $100 bills. Take another look and let that sink in for a bit... I find it absolutely astonishing that the pentagon could lose track of this much money and for there to be no MSM coverage of this scandalous amount of mismanagement and fraud. Where is the demand for accountability? Why is the first question to ANY candidate for president not "What would you do about the massive fraud and waste at the Pentagon?" Where are the hearings, nay indictments, that are warranted when a sum equal to 1/2 of our national debt can be sent to the pentagon to never be accounted for.
We progressives need to work this scandal into every political conversation we engage in, especially when we talk to conservatives. Cutting government spending and accountability are supposed to be core GOP values.
Combine "Known" Pentagon waste (like the 1.5 Trillion dollar F35) with missing pentagon money and you have a good chunk of our entire national debt represented.
"What's that? Body cameras for all cops will be too expensive? How bout we find 1/10,000th of the money we sent to the pentagon."
"Oh really? There's 500 million in provable food stamp fraud going to poor people how bout the 8.5 TRILLION the pentagon can't account for?"
"Oh really? You think Obama care is going to cost us almost a trillion dollars over 15 years? How about the 8.5 Trillion that just disappeared into the ether at the pentagon? What's you're take on that?"
"Oh really, you're concerned about deficit spending and the debt? Fully 1/3 of the national debt it is money we sent the Pentagon and they can't tell us where it went. It's just gone."
"College for everyone will cost too much? You must be really pissed at the 8.5 Trillion, with a 't', dollars the pentagon's spent and can't tell us where it went."
Bringing up this "open secret" exposes their hypocrisy, and draws attention to the lack of corporate media attention to this HUGE SCANDALOUS level of waste by the Military/Industrial/Media complex ownership of government. It seems for few hundred million in "be all you can be" ad buys the MSM will keep it's mouth shut. We need to press so called journalists to bring this issue front and center. No candidate should be allowed to talk about government waste or big government with out being asked the follow up "What would you do about the massive 8.5 Trillion dollars the pentagon can't account for?"
In short; nothing reinforces our position that the money for valuable social and infrastructure programs (that have provable returns on investment) is actually there than this scandal. We need to harp on this until we get some answers and we need to leverage it more to shut down debate about desperately needed social program spending.
SUMMARY: Greece struck a debt deal after a long night of negotiations with European creditors. According to the preliminary deal, the nearly bankrupt country will receive a $95 billion bailout over three years, and be subject to tough austerity measures. Special correspondent Malcolm Brabant reports from Greece and Judy Woodruff gets reaction from Eswar Prasad of Cornell University.
JUDY WOODRUFF (NewsHour): The nation of Greece and its creditors reached a preliminary deal to avert immediate financial collapse, but it demands that the struggling country make major concessions and means continued sacrifice and hardship for its people.
NewsHour special correspondent Malcolm Brabant has this report.
MALCOLM BRABANT (NewsHour): Prime Minister Alexis Tsipras emerged after a long night of bitter negotiations.
PRIME MINISTER ALEXIS TSIPRAS, Greece(through interpreter): Until the end, we battled to get an agreement to get the country back on its feet. We were faced with a very difficult decision within hard dilemmas. We took the responsibility to decide in order to avert the most extreme plans by conservative circles in the European Union.
MALCOLM BRABANT: German Chancellor Angela Merkel was one of those conservatives who ran a hard bargain with the Greeks. They seemed ready to quit until European Council President Donald Tusk, who is also president of Poland, persuaded them to keep at it.
DONALD TUSK, President, European Council: The decision gives Greece the chance to get back on track with the support of European partners. It also avoids the social, economic and political consequences that a negative outcome would have brought.
MALCOLM BRABANT: Meanwhile, in Athens, pensioners saw no reason to celebrate, as they queued up to withdraw money outside closed banks.
SUMMARY: Greek Prime Minister Alexis Tsipras is now offering concessions to creditors, such as a higher sales tax and pension changes, in hopes of winning a new bailout worth nearly $60 billion. Jonathan Rugman of Independent Television News reports on the response to the controversial package in Greece.
JUDY WOODRUFF (NewsHour): Now, the drama in Greece heading toward a climax at a Sunday summit of European leaders.
The Greek prime minister has now offered concessions to creditors, ranging from a higher sales tax, the so-called VAT — VAT — to pension changes. The goal? A new bailout worth nearly $60 billion.
Jonathan Rugman of Independent Television News reports.
JONATHAN RUGMAN, Independent Television News: Climbing the steps of Greece’s Parliament today, the members of a government forced into a last-minute climb down. Days ago, they were railing against Greece’s creditors. Today, they were talking up the chances of a new deal with them this weekend.
OLGA GEROVASILI, Greek Parliament Member (through interpreter): I am certain we will reach an agreement. There was never any doubt. The battle was lengthy and long and will reach its conclusion by taking the steps you already know about.
JONATHAN RUGMAN: And greeted like a conquering hero, Alexis Tsipras, the prime minister, who is now pushing through Parliament the kind of austerity 61 percent of Greek voters rejected last weekend, because money or lack of it talks.
These banks could be bankrupt by Monday, and so the government, it seems, has blinked. Greece’s proposals are on time and to the kind of budget a wary Eurozone might accept, giving into more austerity, with a standard VAT rate at 23 percent beginning in October, reducing the 30 percent VAT tax break applied to tourism-rich Greek islands, corporation tax rising from 26 percent to 28 percent, as Greece’s creditors demanded, and raising the standard retirement age to 67 over the next seven years.
But what is Mr. Tsipras hoping to win in return? Well, 53.5 billion euros in loans over three years and, crucially, restructuring the repayment of Greece’s vast debt, though the 13 billion euros in tax rises and spending cuts is at least four billion euros more than the package Greeks on Sunday voted against.
A new and lasting deal with Greece will depend on the Greeks actually doing what they say they will and not buckling under the weight of more austerity. And Germany will need to agree on some form of debt relief which doesn’t leave German taxpayers feeling shortchanged. But whatever the outcome of this weekend’s talks, Greece is heading for years of economic hardship and the debate over its Eurozone membership is very unlikely to stop.
SUMMARY: Greece traditionally has had a low suicide rate, but over five years of austerity, the country has seen an increase in the number of people taking their own lives. And if the crisis gets worse, the number of suicides and other preventable deaths from lack of medical care or drugs is likely to rise. Special correspondent Malcolm Brabant reports from Athens.
GWEN IFILL (NewsHour): Now another look at Greece, this time how its strained economy is affecting its people.
For the first four months of 2014, the budget for Greece’s 132 hospitals was $735 million. This year, that number dropped to $50 million, a precipitous decline that has placed predictable stress on the nation’s medical system. Now psychiatrists and other medical practitioners warn that deepening poverty will lead to an increase in suicides and preventable deaths.
NewsHour special correspondent Malcolm Brabant reports from Athens.
MALCOLM BRABANT (NewsHour): It’s a letter that no one should have to read. The suicide note left by 77-year-old pharmacist Dimitris Christoulas is now a treasured possession of his daughter, Emmy.
EMMY CHRISTOULAS, Daughter of Suicide Victim (through interpreter): “If one Greek was to take up a Kalashnikov, I would be the second. But since I am too old to react actively and physically, I find no other solution than that of a dignified exit before I begin searching through the garbage for my food. I believe that, one day, because the younger generation have no future, they will take up arms and hang the traitors of the nation, just as the Italians did in 1945.”
MALCOLM BRABANT: Christoulas shot himself beneath this pine tree in Athens’ Syntagma Square, where opponents urged Greek voters to reject the international austerity program in last weekend’s referendum.
One of the first on the scene was doorman Panos Kyriakopoulos
PANOS KYRIAKOPOULOS (through interpreter): Everyone who works around here was dreadfully upset, as well as those who were passing by. It was so unexpected, a man blowing out his brains in Syntagma Square. It was terrible, just terrible.
By now it’s a Republican Party tradition: Every year the party produces a budget that allegedly slashes deficits, but which turns out to contain a trillion-dollar “magic asterisk” — a line that promises huge spending cuts and/or revenue increases, but without explaining where the money is supposed to come from.
But the just-released budgets from the House and Senate majorities break new ground. Each contains not one but two trillion-dollar magic asterisks: one on spending, one on revenue. And that’s actually an understatement. If either budget were to become law, it would leave the federal government several trillion dollars deeper in debt than claimed, and that’s just in the first decade.
You might be tempted to shrug this off, since these budgets will not, in fact, become law. Or you might say that this is what all politicians do. But it isn’t. The modern G.O.P.’s raw fiscal dishonesty is something new in American politics. And that’s telling us something important about what has happened to half of our political spectrum.
So, about those budgets: both claim drastic reductions in federal spending. Some of those spending reductions are specified: There would be savage cuts in food stamps, similarly savage cuts in Medicaid over and above reversing the recent expansion, and an end to Obamacare’s health insurance subsidies. Rough estimates suggest that either plan would roughly double the number of Americans without health insurance. But both also claim more than a trillion dollars in further cuts to mandatory spending, which would almost surely have to come out of Medicare or Social Security. What form would these further cuts take? We get no hint.
Meanwhile, both budgets call for repeal of the Affordable Care Act, including the taxes that pay for the insurance subsidies. That’s $1 trillion of revenue. Yet both claim to have no effect on tax receipts; somehow, the federal government is supposed to make up for the lost Obamacare revenue. How, exactly? We are, again, given no hint.
And there’s more: The budgets also claim large reductions in spending on other programs. How would these be achieved? You know the answer.
It’s very important to realize that this isn’t normal political behavior. The George W. Bush administration was no slouch when it came to deceptive presentation of tax plans, but it was never this blatant. And the Obama administration has been remarkably scrupulous in its fiscal pronouncements.
O.K., I can already hear the snickering, but it’s the simple truth. Remember all the ridicule heaped on the spending projections in the Affordable Care Act? Actual spending is coming in well below expectations, and the Congressional Budget Office has marked its forecast for the next decade down by 20 percent. Remember the jeering when President Obama declared that he would cut the deficit in half by the end of his first term? Well, a sluggish economy delayed things, but only by a year. The deficit in calendar 2013 was less than half its 2009 level, and it has continued to fall.
So, no, outrageous fiscal mendacity is neither historically normal nor bipartisan. It’s a modern Republican thing. And the question we should ask is why.
One answer you sometimes hear is that what Republicans really believe is that tax cuts for the rich would generate a huge boom and a surge in revenue, but they’re afraid that the public won’t find such claims credible. So magic asterisks are really stand-ins for their belief in the magic of supply-side economics, a belief that remains intact even though proponents in that doctrine have been wrong about everything for decades.
But I’m partial to a more cynical explanation. Think about what these budgets would do if you ignore the mysterious trillions in unspecified spending cuts and revenue enhancements. What you’re left with is huge transfers of income from the poor and the working class, who would see severe benefit cuts, to the rich, who would see big tax cuts. And the simplest way to understand these budgets is surely to suppose that they are intended to do what they would, in fact, actually do: make the rich richer and ordinary families poorer.
But this is, of course, not a policy direction the public would support if it were clearly explained. So the budgets must be sold as courageous efforts to eliminate deficits and pay down debt — which means that they must include trillions in imaginary, unexplained savings.
Does this mean that all those politicians declaiming about the evils of budget deficits and their determination to end the scourge of debt were never sincere? Yes, it does.
Look, I know that it’s hard to keep up the outrage after so many years of fiscal fraudulence. But please try. We’re looking at an enormous, destructive con job, and you should be very, very angry.
Our statistical indicators include record corporate profits and millions flocking to Obamacare, along with stagnant wages and a doubled debt.
GWEN IFILL (Newshour): There's been a lot of talk about the politics behind the bipartisan budget agreement.
We take a closer look now at the devil in those details.
Senate Democrats were happy today to tout the budget deal headed to the president's desk.
Budget Committee Chairwoman Patty Murray said, the agreement was about more than just funding the government.
SEN. PATTY MURRAY, D-Wash.: We showed the American people that members of Congress can work together, that we can listen to each other and get into a room and talk frankly without trying to hurt each other politically. Secondly, by breaking through the partisanship, we finally ended the seemingly never-ending cycle of lurching from one crisis to the next.
GWEN IFILL: The budget plan averts another government shutdown like the one this past October that lasted for 16 days. It also gives the Pentagon some relief from automatic spending cuts and restores billions of dollars to domestic programs, including scientific research.
The $62 billion price tag will be paid for in part by scaling back benefits for military retirees under the age of 62. But, already, there is talk from both sides about finding the money somewhere else instead.
SUMMARY: Both Senate Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., expressed optimism that a deal on the shutdown would be reached by the end of the week. However, it remained unclear how House Republicans would receive any Senate resolution. Congressional correspondent Kwame Holman reports.
SUMMARY: Senate leaders showed hope that they might be headed towards an end to the government shutdown, while House remains uneasy about the path forward. Robert Costa of the National Review joins Gwen Ifill to discuss why a short-term deal may be necessary and what concessions both sides may make to resolve the damaging impasse.
SUMMARY: From local economies dependent on defense spending to tourist hot spots reeling from closures, communities across the nation are feeling the pinch of the government shutdown. Judy Woodruff gets perspective from Cathy Lewis of WHRV in Hampton Roads, Va., Karen Kasler of Ohio Public Radio and Scott Shafer of KQED in San Francisco.
SUMMARY: As lawmakers show signs of progress towards a deal to end the shutdown and raise the debt ceiling, how are global markets responding? Ray Suarez gets analysis from Zanny Min-ton Beddoes of The Economist on the effects that repeated political standoffs over may have on U.S. financial credibility.
SUMMARY: A new housing development in San Francisco is ready for its new tenants -- homeless individuals and families -- to move into apartments of their own. But due to the government shutdown, units that are federally subsidized sit empty. Mina Kim of KQED reports on how the standstill in Washington is affecting people in California.
SUMMARY: The government shutdown has touched hundreds of thousands of federal employees, but as the shutdown stretches on, the distinction between essential and non-essential has varied depending on agency and need. Jeffrey Brown talks to Reid Wilson of The Washington Post and Gregory Korte of USA Today for a broad look at the impact.
Seven Senate Republicans said they are holding open the possibility of backing Democrats’ plan for a debt-ceiling increase without conditions, raising the prospect for sending a measure to the House before the deadline.
Democrats, who control 54 seats in the 100-member chamber, would need the support of at least six Republicans to pass a one-year increase in the nation’s $16.7 trillion debt ceiling that they plan to introduce today. They are planning a test vote before the end of this week.
Some Senate Republicans, including Susan Collins of Maine, Saxby Chambliss of Georgia, Lisa Murkowski of Alaska, and Lamar Alexander of Tennessee, didn’t rule out backing the Democrats’ plan. They said they must first see details, which would raise the debt limit before U.S. borrowing authority lapses Oct. 17.
“We’ve got a situation where you have a calendar running, you have people who are frustrated and upset, and so let’s figure it out,” Murkowski said in an interview at the Capitol yesterday. “We shouldn’t be dismissing anything.”
That’s in contrast to House Speaker John Boehner, an Ohio Republican, who has said any plan to lift the debt limit must be paired with cuts and other ways to curb U.S. spending.
One Republican senator -- Illinois’s Mark Kirk -- said he would support a so-called “clean” debt ceiling.
Senators Jeff Flake and John McCain, both of Arizona, left the door open to supporting Democrats’ plan.
Measure’s ‘Structure’
“It depends on the structure of it,” Flake said.
McCain said in an interview today that he wanted there to be negotiations on a debt-ceiling increase, after saying yesterday that his support for Democrats’ plan would depend on “what the dynamics are.”
“If there’s real reason to sit down and negotiate this out, then I’ll vote for anything,” he said today.
With nine days to go before borrowing authority lapses, Democrats and Republicans are locked in a partisan standoff that has brought a government shutdown into its second week. President Barack Obama and Senate Democratic leaders have said they won’t negotiate on a debt-ceiling increase.
If the Democratic plan were to pass the Senate with bipartisan support, that would further pressure Boehner to pass a debt-ceiling bill in the House and avoid default.
Six Votes
That has put the spotlight on Senate Republicans, who could be crucial to a breakthrough in the stalemate, particularly if the necessary half dozen or more would be willing to join with Democrats to advance the measure.
“I will be listening today, and then I will decide what to do,” Alexander said.
Republican Bob Corker of Tennessee said he wants to see changes in Medicare and Social Security as part of a deal to raise the debt ceiling.
“These reforms need to be a part of what we do here,” he said.
Other Republicans, including Rob Portman of Ohio and Kelly Ayotte of New Hampshire said they were inclined to push for a broader deficit-reduction agreement.
“What I’m focused on is working with Republicans and Democrats alike to come up with a way to deal with the underlying problem of overspending,” Portman said in an interview.
PRESIDENT BARACK OBAMA: I will sit down and work with any one of any party.
KWAME HOLMAN (Newshour): President Obama came to the White House Briefing Room this afternoon to rebut Republican criticism that he's refused to negotiate.
PRESIDENT OBAMA: I have shown myself willing to go more than halfway in these conversations. And if reasonable Republicans want to talk about these things again, I'm ready to head up to the Hill and try. I'll even spring for dinner again. But I'm not going to do it until the more extreme parts of the Republican Party stop forcing John Boehner to issue threats about our economy.
KWAME HOLMAN: In fact, the president said, he's even willing to discuss changes in the health care act after Republicans agree to reopen the government and raise the national debt ceiling.
He and House Speaker Boehner did get together by phone this morning, but reportedly mostly exchanged talking points. Shortly after Mr. Obama spoke this afternoon, Boehner came before the cameras with his answer: The president's position he said, is unsustainable.
SUMMARY: President Barack Obama spoke at FEMA where he said he will not negotiate with House Republicans while the shutdown continues. A senior presidential adviser suggested the White House might be open to a short-term debt limit increase. Judy Woodruff talks to Robert Costa of the National Review about the continuing impasse.
The bitter fiscal stalemate in Washington is producing nervous ripples from London to Bali, with increasing anxiety that the United States might actually default on a portion of its government debt, set off global financial troubles and undercut fragile economic recoveries in many countries.
Five years after the financial crisis in the United States helped spread a deep global recession, policy makers around the world again fear collateral damage, this time with their nations becoming victims not of Wall Street’s excesses but of a political system in Washington that to many foreign eyes no longer seems to be able to function efficiently.
There is plenty of evidence that the United States remains engaged globally on many levels, with the dual commando raids on targets in Africa this weekend the most recent. But the partial shutdown of the United States government has shown again that Washington’s problems extend beyond American borders. Effectively grounded by the political crisis at home, President Obama was absent from a summit meeting of Pacific Rim leaders in Indonesia on Monday, giving China greater opportunity to highlight its role in the region.
One of the attendees, President Vladimir V. Putin of Russia, provided a possibly sardonic statement of sympathy for Mr. Obama. “We see what is happening in U.S. domestic politics and this is not an easy situation,” Mr. Putin said, adding, “If I was in his situation, I would not come, either.”
In Europe, the effort to reach a big new trade accord with the United States is at a standstill, with many government agencies in Washington operating with skeletal staffs. And as worrisome as that kind of delay is in Europe, it is only a precursor to the almost certain economic fallout if the United States does not raise the debt limit and defaults for the first time on government securities.
Foreigners often complain, usually with some forbearance, that the United States is so powerful that its president is in some important sense their president, too. In their case, however, they lack the opportunity to cast a vote.
There is not much that any foreigner can do about Mr. Obama’s confrontation with the House speaker, John A. Boehner, who said Sunday that his Republican members would not accept a clean bill — one with no conditions — that would raise the American debt limit before the government hits its borrowing limit and risks technical default as soon as next week. At the same time, Mr. Boehner has told colleagues privately that he would avert a default, but whether he actually has the ability to do so remains uncertain.
“The international community is asking, ‘Does the U.S. still have the will to act?’ ” said Xenia Dormandy, a senior fellow at London’s Chatham House and a former American official in the State Department and the National Security Council under President George W. Bush.
“Both the Syria vote and the current budget crisis are nerve-racking for the world,” she said, referring to Mr. Obama’s sudden decision to ask Congress to authorize a strike on Syria and then changing his mind.
Alain Frachon, a columnist and former Washington correspondent for the French newspaper Le Monde, said, “Washington is looking more like the Italian political system, with its permanent crises, and not a presidential system, as before.”
SUMMARY: The Wall Street Journal’s Janet Hook talks with Hari Sreenivasan about the increasingly contentious war of words between President Obama and Speaker Boehner. Hooks says that the unanimous vote on federal worker pay relieves pressure on Congress only briefly, as the debt ceiling deadline looms.
SUMMARY: Julie Pace, White House Correspondent for the Associated Press got an exclusive interview with President Obama on Friday, four days into the partial government shutdown. Pace shared the President's comments on the shutdown and the impending debt ceiling with Hari Sreenivasan.
"He knows what my phone number is, all he has to do is call."
That was House Speaker John Boehner appearing on ABC's "This Week," clearly frustrated with President Barack Obama.
Boehner on Sunday stressed he just needs a "simple conversation" with the president, something that hasn't been happening beyond a brief and unfruitful meeting with congressional leaders at the White House last week.
"The American people expect in Washington when we have a crisis like this, that the leaders will sit down and have a conversation. And I told my members the other day that there may be a back room somewhere, but there's nobody in it," Boehner said.
The Ohio Republican's interview came on the same weekend the Associated Press released its wide-ranging interview with the president.
Mr. Obama told Julie Pace what he's been saying for several days -- that he's only willing to negotiate with Republicans on health care and spending if Boehner holds a vote on a politics- and policy-free measure to fund the government.
Boehner also blasted Senate Majority Leader Harry Reid, D-Nev., as inflexible. "That's what he's saying, complete surrender and then we'll talk to you," Boehner said.
A Reid spokesman responded in a Monday statement that Boehner says "things that fly in the face of the facts or stand at odds with his past actions."
"Americans across the country are suffering because Speaker Boehner refuses to come to grips with reality," Reid communications director Adam Jentleson's statement read. "Today, Speaker Boehner should stop the games and let the House vote on the Senate's clean CR so that the entire federal government can re-open within twenty-four hours."
The hardened lines signal there isn't likely to be any resolution to the standoff any time soon. Without a legislative path forward, what we see play out instead is the political battle.
On Monday as the shutdown stretched into its second week, the president's Organizing for Action re-election campaign spinoff released what officials say will be a "national cable" television ad bemoaning an "irresponsible" and "reckless" government shutdown.
The spot features GOP members of Congress appearing on television last week, including Rep. Marsha Blackburn of Tennessee proclaiming, "People are probably going to realize they can live with a lot less government."
"The government shutdown is hurting veterans, seniors and our kids," a female narrator says. "Now tea party Republicans are threatening an economic shutdown, refusing to pay our nation's bills, endangering American jobs."
It closes with a photo of House Republican leaders and an ask: "Tell them to stand up to the tea party."
SUMMARY: President Barack Obama called leaders of the House and Senate to the White House to discuss the stalemate keeping the government shutdown. House GOP members forged ahead with various bills to re-open parts of the government, but Democrats dismissed that approach. Congressional correspondent Kwame Holman reports.
SUMMARY: After day two of the government shutdown, some industries, like tourism, have already taken a hit. How might the effects spill over into other sectors of the economy and the markets? Judy Woodruff looks to Diane Swonk of Mesirow Financial and Mark Zandi of Moody's Analytics for analysis and predictions.
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DIANE SWONK, Mesirow Financial Holdings, Inc.: (on shutdown) And, yes, we also see these workers, census workers are all across the country; 85 percent of federal workers workout side of Washington, D.C., so as bad as it is in Washington, these are workers that vote all across the country, which, believe me it's having an impact, like I mentioned, the 4,000 workers in Kentucky. We have got workers here in Illinois that clearly aren't working at this stage of the game. The roads are not as clogged and all the retailers that get the fallout.
But also the auto industry is very concerned. I have gotten several calls from Detroit already, concerned about the uncertainty created by this, people not knowing what this means. And as the events continue to fall out as we approach the debt ceiling as well, that can really rock financial markets and that causes hesitation. Hesitation in an economy that's already weak is our greatest enemy.
When consumers are uncertain, they don't buy big-ticket items or luxury items. They don't spend on that extra meal out or going out to the movies. On the flip side of it, we also see more importantly businesses not willing to pull the trigger and hire, which is something that Mark was talking about. We have already seen the largest hiring in the sort of leisure and hospitality industries, but you are not going to see much of that at all. That pullback right as we enter into the holiday season I think is really critical.
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MARK ZANDI, Moody's Analytics: Well, it's everybody then, because if we hit the debt limit, what that means is that the Treasury can only pay the bills for which it has enough cash. So it won't have enough cash to pay all the bills and there are a lot of bills.
Now, they're going to make their payments to the debt holders, the people who own the Treasury bonds. But that's going to leave less for everyone else. And so that means Medicare-Medicaid recipients, if they -- if we don't settle this by November 1, it means Social Security recipients won't get their check on time.
WITH ONLY a couple of days left before a Sept. 30 deadline, it is anyone’s guess whether Congress will keep the federal government funded and open for business — for another month and a half. That is to say, no one knows whether government will be open on the day, sometime in the second half of October, when a bigger potential crisis rolls around. That’s when the Treasury Department runs out of cash and defaults on U.S. obligations — unless Congress raises the $16.7 trillion debt limit. A government shutdown would be a stupid, self-inflicted wound; default could be a debacle.
The proximate cause of this predicament is the mischievousness of ultra-conservative Republicans. Sen. Ted Cruz (Tex.) and a band of like-minded back-benchers in the Senate and House have launched a spurious and self-interested crusade to “defund” Obamacare, linked to the must-pass spending bill. Their reckless, doomed campaign has thwarted plans by more mainstream Republicans to pass a continuing resolution and avoid blame for a shutdown — so as to stage what they think, probably correctly, is a more winnable battle with President Obama over the debt ceiling.
Mr. Obama and his fellow Democrats have been content to sit back and let the Republicans self-destruct rather than negotiate. Under the circumstances, they have little incentive to do anything else.
The deeper cause of this dysfunction is a profound division between the two parties over the direction of the country — a red-blue gulf that spans everything from health care to taxes to immigration to spending. Only the federal helium reserve seems to enjoy bipartisan support these days. Ideological purists on both sides increasingly dominate intraparty politics, squeezing out moderates and magnifying the interparty gap.
Meanwhile, the economy struggles, burdened by misgovernment in Washington and the uncertainty that it inflicts on investors and workers alike. Americans need a feasible alternative to the partisan deadlock in Washington. At this point the best that might be hoped for could be an extended timeout, to give the economy a respite while politicians regroup and, one hopes, calm down.
A prolonged government shutdown — followed by a potential default on the federal debt — would have economic ripple effects far beyond Washington, upending financial markets, sending the unemployment rate higher and slowing already tepid growth, according to a wide range of economists.
A shutdown of a few days might do little damage, but economists, lawmakers and analysts are increasingly bracing for a shutdown that could last a week or more, given the distance between Republicans and Democrats. Such an outcome would suck money out of the economy and spread anxiety among consumers and businesses in a way that is likely to hold back economic activity.
And a default on the federal debt, which may occur within 30 days without congressional action, would be much worse, economists say. Failing to raise the debt ceiling would require the government, a major driver of growth, to cut spending by about a third, potentially forcing delays in Social Security checks, military pay and payments to doctors.
There are other risks, too. On Oct. 17, the Treasury is scheduled to ask investors for $120 billion in loans. But if investors grow nervous about whether the United States will be able to pay them back, they are likely to demand higher interest rates, which would cause rates to spike throughout the financial system, leading to more expensive mortgages, auto loans and credit card bills.
Doubt could grow about the safety of parking money in U.S. bonds, the linchpin of the global financial system.
“It’s corrosive on the economy,” said Mark Zandi, chief economist of Moody’s Analytics. A lengthy shutdown followed by a default would be “the nightmare of the recession all over again.”
Even if lawmakers find a way out of a shutdown or a default, this fall’s brinkmanship — the fourth such crisis in two years — is likely to have negative effects on the economy. With so much uncertainty in Washington, economists say that businesses, flush with cash, have been reluctant to invest and hire.
“The simple story is it creates a tremendous amount of uncertainty,” said Ethan Harris, a top economist with Bank of America. “One of the unfortunate side effects of the brinksmanship is a message to business leaders to delay long-term commitments and wait to see whether something really bad happens.”
GWEN IFILL (Newshour): The House of Representatives today approved legislation to keep the government up and running, this time three weeks in advance of a new deadline. But the bill still faces hurdles in the Democratically-controlled Senate.
MAN: On this vote, the yeas are 267, the nays are 151. The bill is passed without objection. A motion to reconsider is laid on the table.
GWEN IFILL: Anxious to avoid yet another Washington budget showdown, the House today agreed to a spending bill to finance the government through September, and avert a potentially devastating government shutdown.
The GOP measure would leave in place $85 billion dollars in across-the-board spending cuts that took effect last week. But it would give the Pentagon and the Department of Veterans Affairs greater flexibility to manage the reductions.
Kentucky Republican Hal Rogers chairs the Appropriations Committee.
REP. HAL ROGERS, R-Ky.: This bill takes the risk of a government shutdown off the table, funding the government for the remainder of the fiscal year, while helping maintain our national security and providing our troops and veterans with consistent, adequate funding.
GWEN IFILL: House Democrats said the cuts should be stripped from the bill.
Virginia lawmaker Gerry Connolly:
REP. GERRY CONNOLLY, D-Va.: We have to get our arms around spending, but not in a mindless, meat axe way. It is going to hurt America. And to bake it into this continuing resolution, in my view, is a terrible mistake.
GWEN IFILL: The bill now goes to the Senate, where Majority Leader Harry Reid said Democrats hope to build in even more exceptions to the automatically mandated cuts.
House Minority Leader Nancy Pelosi said, once that happens, the commitment of Republicans to averting a shutdown will be put to the test.
REP. NANCY PELOSI, D-Calif.: The Senate's not going to accept this bill. And when they don't, they will send back another bill, and we will just see how many votes there are on the Republican side to keep government open, because we have absolutely no intention of having the government shut down.
GWEN IFILL: Oklahoma Republican Tom Cole conceded that today's action is just the first step toward resolving the recurring budget and spending debate.
REP. TOM COLE, R-Okla.: And we can have, I think, a good negotiation going back and forth between the two parties. This is the beginning of a process. It's the beginning of a return to regular order. And it's an opportunity to work, I think, in a bipartisan fashion.
GWEN IFILL: With an eye on the inclement weather outside, House Republicans also moved up today's vote by 24 hours. Also, if the weather holds, President Obama was scheduled to dine tonight with a group of Republican senators, in part in response to complaints that he has failed to reach across the aisle. And Mr. Obama announced plans to visit Capitol Hill next week for meetings with House and Senate Republicans.
JUDY WOODRUFF (Newshour): It was the starkest statement yet on the possible effect of automatic federal budget cuts, due to begin in nine days, on Mar. 1st. Defense Sec. Leon Panetta notified his entire civilian work force that employees could be sent home without pay.
The warning was aimed at Defense Department workers at the Pentagon and around the world. Secretary Panetta sent them a written message, as he left for a NATO defense ministers meeting in Brussels. In it, he said there are limited options for coping with the looming across-the-board cuts. And he said: "Should sequestration occur and continue for a substantial period, DOD will be forced to place the vast majority of its civilian work force on administrative furlough."
UNDERSECRETARY OF DEFENSE FOR PERSONNEL AND READINESS JESSICA WRIGHT: On our civilians, it will be catastrophic.
JUDY WOODRUFF: Within hours, top Pentagon officials were out, saying employees could lose one day of work per week for 22 weeks.
SUMMARY: President Obama called on Republicans to "act responsibly" and raise the nation's debt ceiling before March when the U.S. is expected to breech its borrowing limit and possibly default on its debt. Judy Woodruff talks to the Wall Street Journal's Carol Lee and Politico's Jake Sherman about Obama's plans for the federal deficit.
