Himes warns of spending impasse
Published 7:31 pm, Wednesday, September 25, 2013
Thousands of federal employees could be going without a paycheck next month if Congress fails to come to an agreement on an extension on federal spending after the government's fiscal year ends Oct. 1.
Speaking Tuesday to area media and Christopher Bruhl, president and chief executive officer of the Business Council of Fairfield County, U.S. Rep. Jim Himes, D-Conn., warned that the impasse between Democrats and Republicans is deep and said that the GOP's demand to de-fund the Affordable Health Care Act to curry its support is a non-starter.
"I fear that, as in 1995, we are headed to a government shutdown on October 1. October 1 is the end of the government's fiscal year. Many federal employees won't get checks," Himes said.
A long-term shutdown could also affect Connecticut defense contractors, because it would mean no new federal contracts would be awarded, jeopardizing hundreds, if not thousands, of jobs.
A bill passed by the U.S. House of Representatives in a party-line vote on Friday would continue to fund the government, but de-fund the Affordable Care Act.
That possibility is highly unlikely to get through the U.S. Senate.
"If you don't get a paycheck, you don't buy a pizza or a car," Himes said, stressing the ripple effect a decision not to fund the government would have.
Himes warned that a default on the federal debt could follow, sending tremors around the world and seriously affecting the global economy and financial markets.
President Barack Obama has gone on the road to urge Americans to support the Democrats in their defense of funding for the Affordable Care Act, saying that Republicans in Congress have turned the debate into a political issue, ignoring the impact on the public.
While defense spending, Medicare and Medicaid processes would not be affected by a shutdown, national parks would close, visas and passports would not be processed, and federal loans would be halted.
"In order to pay our bills, we have to continue to borrow," Himes said, calling the possibility of the U.S. defaulting on its debts "the grenade on the table." "The effect on our economy would be catastrophic. Some Republicans want to see it (Affordable Care Act) stopped."
Himes warned that the nation will be in a crisis if Congress does not vote to raise the Treasury Department's debt limit.
"We're going to a very dangerous place if we don't raise the debt ceiling," he said, reinforcing Treasury Secretary Jack Lew's warning to Congress this month that if the debt ceiling were not raised, a default on the nation's debt would be the consequence and the nation's borrowing cost would increase.
Himes said the Treasury Department would start being unable to make payments sometime in mid-October.
Himes said he supports ongoing discussions with Republicans in the search for a "grand bargain" on the U.S. budget.
Republicans in Congress want to see the Affordable Care Act fail, he said, contending that some would prefer to see the government default on its debt rather than have the Affordable Care Act succeed.
The U.S. stock markets have become accustomed to listening to both sides of Congress squabbling over spending, Himes said, but jeopardizing the nation's full faith in credit by not being able to pay its debts would send investors scrambling.
The markets' confidence in the government would be severely damaged, Bruhl said, and retirees' investment portfolios would be decimated.
"If there is a debt ceiling default, the mortgage, bond and equity markets all would be seriously impacted," he said.
Bruhl said his contacts in the local financial services community believe the debt ceiling will be raised.
"The idea that we would not pay our debts is a devastating statement," he said. "Our full faith in credit would be made mockery."