The Democratic-controlled Senate Friday narrowly voted to block a Republican measure that would have forced Congress to pass a balanced-budget amendment and cap spending before increasing the debt ceiling. The “Cut, Cap and Balance Act” was rejected by a 51-46 vote.
With the August 2 deadline less than two weeks away, no deal has been struck to raise the nation’s debt ceiling. As Congress and the President remain at a stalemate, the reality of the federal government defaulting on its obligations inches closer. University of South Carolina Economics professor Bill Hauk says, if the debt ceiling is not raised and the government cannot borrow any more money, it would have roughly enough revenue to pay 60 percent of its bills.
Hauk says some tough decisionswould have to be made concerning what non-essential and essential government functions will have to go unfunded or shutdown. Also national parks, forests, and other federal recreational and tourist areas would possibly be closed for an indefinite period.
Hauk said several weeks ago he was hopeful that a major deal would be struck that would combine an increase in the debt ceiling coupled with longer term structural reforms to get the federal government’s revenues and spending back more in alignment. Now that we’ve nearly reached the eleventh hour, Hauk says the best that can be hoped for is a stopgap measure to appease both sides of the aisle.
Hauk says the fight will likely continue through the 2012 election.