NATIONAL – Government shutdown over, default averted

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Shutdown - It's Over photoThe government was reopened and a possible default averted on Thursday, as Senate and House leaders joined together to reach a compromise. There was strong bipartisan support for the bill, which ended the government shutdown and raised the debt ceiling.  The House passed the measure 285-144 and the Senate passed it 81-18. The bill states that the federal government will be funded until January 15, and it’s borrowing power will be good through February 7. The hope is that it will prevent the threat of another shutdown, as one of the stipulations is that Congress reaches an agreement on a long-term budget plan by mid-December. But Senate Majority Leader Harry Reid stated his belief that the agreement will surely bring about economic stability. “This compromise we reached will provide our economy with the stability it desperately needs. It’s never easy for two sides to reach consensus. It’s really hard, sometimes harder than others. This time was really hard,” Reid said. “The country came to the brink of a disaster. But in the end, political adversaries set aside their differences and disagreement to prevent that disaster.”

A group of bipartisan negotiators will meet beginning on Thursday, and will engage in a formal process of working out the different spending plans proposed by the Republicans and Democrats. If things go smoothly, a deal could be reached before the January 15 deadline. “We want to look for ways to find common ground, to get a budget agreement,” said House Budget Chairman Paul Ryan. Likely to be included in the budget agreement are reductions in budget deficits and debt, tax increases and limitations on programs like Medicare. Wednesday’s agreement however, did not result in entitlement spending reductions or a delay in the medical device tax; both were issues that Republicans pushed for.

The Democrats had to make few sacrifices with the resulting agreement. Senator Ted Cruz (R-TX) said that Republicans in the upper chamber were partly to blame, because they were “directing their canon fire” at House conservatives who continuously rejected proposals that they felt didn’t sufficiently reduce Obamacare. “This is a terrible deal today,” Cruz said. “This is a terrible deal for the American people.” However, House Speaker John Boehner said that the effort to end Obamacare will continue, despite the agreement that was made Wednesday. “That fight will continue,” he said. “But blocking the bipartisan agreement reached today by the members of the Senate will not be a tactic for us.” There is still concern that the GOP will try a similar tactic in the coming months, and that another shutdown could occur. However, in an interview with Brian Williams of NBC News, Senator John McCain (R-AZ) called Republicans’ plan to defund Obamacare “a fool’s errand…We inflicted pain on the American people that was totally unnecessary,” McCain added. “We cannot do this again.”

Shortly after the government’s reopening, President Obama addressed the need for change, saying that the American people are “fed up” with the government and the conflicts that prevent anything from getting done. “To all my friends in Congress, understand that how business is done in this town has to change,” he said. President Obama made a direct statement to the GOP saying: “You don’t like a particular policy or a particular president? Then argue for your position. Go out there and win an election. But don’t break it.”

Politicians weren’t the only ones to feel relieved at the arrival of an agreement.  Federal employees were eager to get back to work and back to a regular paycheck. The bill stated that furloughed employees would receive back pay “as soon as practicable.” That sense of ease was also reflected in the stock market, as the S&P 500 hit a new record high Thursday, rising 0.7% to over 1,733. Stocks also rose more than 1% on Wednesday, following the news that Congress had reached a deal to avoid a default. Investors, along with the nation, are contemplating the scenarios  for the next deadlines. Chief investment officer at Haverford Trust, Hank Smith, commented: “While there’s great relief that a deal was inked before the so-called deadline, the reality is that these new deadlines aren’t too far away in terms of passing a budget and the next debt ceiling issue in early February.”

 




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