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Shutdown Update: Debt Ceiling Enters the Debate


October 8, 2013


Shutdown Update: Debt Ceiling Enters the Debate

Week two of the federal government shutdown began with no indication that congressional leaders and the White House are any closer to a resolution that would end the partisan standoff. The likelihood that both sides will be able to reach a deal to end the shutdown is being further complicated by a looming deadline to raise the nation’s debt limit. The U.S. Treasury Department announced that Congress will need to approve an increase in the federal debt ceiling before October 17 in order to avoid a default. So what is the debt ceiling and what does it have to do with the ongoing government shutdown?

The debt ceiling is the legal cap on the government’s borrowing limit. Once the current limit is reached, Congress must approve an increase or risk defaulting on its obligations.  Unlike the short-term funding bill, known as a continuing resolution (CR), at the center of shutdown debate, an increase in the debt ceiling would NOT approve any new funding. It only allows the government to borrow money to pay its existing bills.

As the October 17 deadline approaches, House Republicans have indicated that they may attempt to link the must-pass debt ceiling increase to an FY 2014 funding bill that is needed to reopen the government. This would provide Republicans with additional leverage to extract concessions from Senate Democrats and the White House, which may include additional funding cuts for FY 2014. This has happened once before in 2011 when Congress passed the Budget Control Act, the law that created sequestration, as part of deal to raise the debt ceiling to its current level. If congressional Republicans insist on more cuts as part of a deal to reopen government and raise the debt ceiling again, it could result in more cuts in education funding for programs like Perkins.

Congress continues to lurch from one fiscal crisis to another. Tell your Members of Congress that it's time to get back to work! Let them know that we need  a real investment in Perkins and CTE!

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