Reporting Tim Kephart
Legislative Session Coverage
WASHINGTON (CBSMiami) – Wall Street has a way of staying ahead of the curve and factoring in possible disruptions to the U.S. economy. But, a perfect storm of dysfunction, elections, and deadlines in Washington may derail the recovery and leave the global economy in shambles.
House Republicans haven’t been able to come to an agreement on a way forward to deal with the current budget. The tea party wing in the House is demanding even more and larger spending cuts, but moderate Republicans have started to balk at the constant call for more cuts.
This dysfunction was on display last month when House leadership had to pull a $44 billion package from consideration because it contained cuts that were too deep to transportation and housing programs.
Part of the problem has been the Representative Paul Ryan budget which vowed to balance the budget in 10 years without taking in any new revenues, which budget experts said would require draconian cuts to most government services.
In the Senate, Republicans who typically would help facilitate a deal are facing tea party primary challengers and are having to move further right, which is putting the possibility of compromising with the president even further from reality.
Complicating matters further is the move by Senators Marco Rubio, Ted Cruz, and Mike Lee to call for a complete government shutdown unless the spending bills cancel out any spending for the Affordable Care Act.
Senator Rubio and Republican National Chairman Reince Priebus have tried to spin the plan as being the fault of the president, but the spin has not gotten much traction. Several influential Republican senators, like Tom Coburn, have also decried the Rubio plan as not feasible.
Going further, the nation will hit the national debt ceiling later this year, meaning another fight to raise the debt limit. House Republicans have taken the debt ceiling hostage in recent years demanding more and more cuts to government services.
President Barack Obama has said he will not negotiate further on the debt ceiling and that is setting up a fight over how to raise the debt ceiling. If President Obama sticks to his plan and House Republicans refuse to budge, the nation could default on its debt.
If the situation sounds familiar, it happened in 2011 when the GOP had more leverage over President Obama. At that time, the U.S. credit rating was lowered, there was a large selloff on Wall Street and the economy was set back months in the recovery from the Great Recession.
The fight over preventing a government shutdown led by Senators Rubio, Cruz, and Lee, will be the first fight Congress has to tackle when it returns from the August recess. If/when that hurdle is overcome, the debt ceiling fight will take center stage in Congress.