Deal to End the Shutdown and Lift the Debt-Ceiling Becomes Law

Shortly after midnight on Thursday, Oct. 17, the President signed legislation (H.R. 2775) that temporarily ended the 16 day government shutdown and averted a catastrophic default on the nation’s debt obligations.  The Senate passed the bill 81-18 early Wednesday evening.  Following the Senate vote, the House cleared the bill 285-144.

As last night’s deadline neared, NLC President Marie Lopez Rogers, mayor, Avondale, AZ, urged support for the measure.  "We encourage all members of the House to support this deal to open up the government and raise the debt ceiling. The vote will end a terrible situation that created enormous risks to the economy with almost nothing in return,” she said.  According to Standard and Poor's, the shutdown cost the U.S. economy $24 billion.

“We hope this vote will free up Congress to work on the issues that matter to cities like Marketplace Fairness, comprehensive immigration reform, and making the investments in our communities that will create the building blocks for future economic growth and prosperity," added Mayor Rogers.

The following is a summary of the elements of the law:

  • The measure ends the shutdown and funds the federal government through January 15, 2014, at the fiscal 2013 post-sequestration spending level of approximately $986 billion and provides time for budget negotiations on broader issues, including sequestration.
  • The current $16.7 trillion statutory debt limit on federal borrowing will be suspended through February 7, 2014 – unless Congress enacts a resolution of disapproval.
  • The law includes back pay for the 800,000 federal workers and D.C. government workers who were furloughed during the shutdown.
  • The law requires the Department of Health and Human Services to verify the income qualifications of people who apply for tax subsidies to purchase health care insurance through the new healthcare marketplace exchanges.
  • The law includes an additional $636 million for fighting wildfires.
  • In response to the recent flooding in Colorado, the law allows the Federal Highway Administration to provide up to $450 million in emergency relief funding to states in excess of the current $100 million cap for a single natural disaster in a state, for severe weather events that occur in calendar year 2013.

With the federal government now temporarily reopen for business and able to pay its bills, the big work is yet to come.  House and Senate budget conferees have been named and have until December 13, 2013, to try to negotiate a longer term budget plan over fiscal year 2014 spending.  The differences between the two chambers are significant.  In budget resolutions passed earlier this year, the two sides were $90 billion apart.  (H.Con.Res. 25 and S.Con.Res. 8.)

With cities only now beginning to show signs of economic recovery from the Great Recession, as the negotiations get underway, NLC Executive Director Clarence Anthony called on Congress to do no harm to cities.  “Cities are the economic engines of our country.  We support Congress and the Administration getting its fiscal house in order but not on the backs of our communities,”  he said. “That means a balanced approach to managing the deficit.  It also means preserving essential investments in America’s hometowns and the municipal bond tax exemption.”