Debt Ceiling Bill Includes Controversial "No Pay" Plan

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Republicans will vote tomorrow (Wednesday) on a debt ceiling bill that will give Congress nearly four months to make some major budget decisions – or risk losing out on pay.

The bill aims "to ensure complete and timely payment of the obligations of the United States Government until May 19, 2013," according to a release Monday from the House Rules Committee. Exactly how much the $16.4 trillion debt ceiling will be lifted hasn't been discussed.

In a significant shift in GOP strategy, the legislation does not include specific spending cuts, like previously when Republicans have requested dollar-for-dollar cuts to match the debt ceiling increase.

What it could include is a requirement for both the House and Senate to pass a budget by as early as April 15 or have Congress members' salaries held in escrow until one is passed – what the GOP has coined a "no budget, no pay" rule.

"[I]f the Senate of House fails to pass a budget in that time, members of Congress will not be paid by the American people for failing to do their job. No budget, no pay," House Majority Leader Eric Cantor, R-VA, said last week.

Why GOP Went Drastic with Debt Ceiling Bill

The government is currently running on fumes – or, funds – provided from the Treasury via "extraordinary measures." But those funds are expected to run out sometime between mid-February and early March.

The new debt ceiling proposal would allow the government to issue new debt to pay existing bills. Then the debt ceiling would be increased by the May 19 deadline to reflect the newly issued debt.

The Republican-controlled House's aim in extending the debt ceiling is to force the Democrat-controlled Senate to actually commit to spending cuts by passing a new budget – something that hasn't been done in about four years.

What the GOP really hopes to see from Democrats is some steep and sustainable cuts to entitlement spending.

While a longer debt ceiling deadline could have wide support in Congress, withholding pay likely will not. In fact, many members of Congress have already come out and said the proposal is unconstitutional and violates the 27th Amendment because it alters pay in the midst of a current session.

Why GOP Changed Course

Republicans appear to have recognized the consequences of not raising the debt ceiling and using it as leverage in exchange for spending cuts. They're also getting criticism for halting progress in Washington.

Pressure began mounting from GOP supporters – mostly business groups who favor the GOP but are against the debt ceiling bickering – to try a new tactic to reach a deal.

"There was serious displeasure and concern with the financial services community over the way Republicans handled the debt ceiling issue in 2011," a business advocate familiar with GOP politics told NBC News. "It was the financial community that helped deliver the resources for a Republican takeover in 2012 and now House Republicans are at risk of jeopardizing their credibility with their free market allies. Cutting spending and helping the economy are not mutually exclusive, but Republicans have found a way to make it seem that way in the eyes of voters."

Democrats also applaud the GOP's altered stance.

"It is reassuring to see Republicans beginning to back off their threat to hold our economy hostage. If the House can pass a clean debt ceiling increase to avoid default and allow the United States to meet its existing obligations, we will be happy to consider it," Senate Majority Leader Harry Reid, D-NV, acknowledge in response to the Republican's debt ceiling bill.

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  1. Andy Schuck | January 23, 2013

    Harry Reid may say something that made sense today…..but wait until May, he will sing a different song then, you watch

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