The battle over America's fiscal health continues this week. Congressional House members will vote Wednesday whether or not to suspend enforcement of the country's $16.4 trillion debt limit until May 18. If approved, it would buy Congress three months to finally negotiate a budget proposal with fewer impending deadlines.
To help ensure a budget agreement is finally reached, the proposed legislation includes a provision that the GOP is calling "no budget, no pay." It requires the Senate to pass a budget by mid-April or face a suspension of pay.
“Over the last four years House Republicans have offered plans – our budget plans - we’ve done our budgets, but it’s been nearly four years since the Senate has done a budget," House Speaker John Boehner said at a press conference Tuesday. "Most Americans believe you don’t do your job, you shouldn’t get paid, and that’s the basis for no budget, no pay. It’s time for the Senate to act."
President Obama says he would "not oppose" the measure.
As for the debt ceiling, it would automatically reset to a new level on May 19. Additional spending incurred from now until May 19 would be included.
What does this all mean for the markets? According to a new Bloomberg poll, 36% of global investors cite U.S. fiscal negotiations as the top global risk and 47% of respondents say it's the reason why they are shunning U.S. financial markets.
Josh Brown, vice president at Fusion Analytics, is skeptical of such polls, including this one.
"I don't think we should look at a poll and say 'ok the investor class is right,'" he says, noting that actions matter more than feelings.
"Here's the dirty secret," says Brown. "We actually don't have to cut the deficit. What we have to do is change the trend and these are two very different things."
On Tuesday, Speaker Boehner announced a new plan to balance the budget over the next 10 years -- a more drastic proposal compared to Rep. Paul Ryan's (R-WI) budget blueprint.
“Hardworking taxpayers understand that they’ve got to balance their budgets, whether it’s every week or every month. They also believe that it’s time for Washington to balance its budget," Boehner said. "I think the American people understand that you can’t continue to spend money that you don’t have. It’s time for us to come to a plan that will in fact balance the budget over the next 10 years. It’s our commitment to the American people, and we hope the Senate will do their budget as they should have done over the last four years.”
Even if Congress approves the debt ceiling extension, the next major fiscal deadline facing Congress is March 1 when automatic government spending cuts are set to take effect. The government also faces a possible shutdown on March 27 when the temporary budget measure is set to expire.
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