113th Congress Underway by Thomas J. Spulak

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The 113th Congress opened this week. In many ways, however, it began in the long shadow of the 112th Congress, which ended on January 3. Numerous issues were either left unresolved or only partially addressed, requiring further action. This includes addressing debt limit, the sequestration and the fiscal year 2013 appropriations bill.

Early in the year, Republicans, especially in the House of Representatives, appeared to be hardening their resolve to use the late February expiration of the debt limit to achieve cuts in government spending. This tactic worked in the summer of 2011 but resulted in the downgrading of U.S. Treasury debt. The President has stated on several occasions that he will not negotiate over the debt limit and expects the Congress to extend the debt limit and honor America's debts as a matter of course. Recently, however, the House altered their course of action and today they passed a bill, by a vote of 285-144, to extend the debt limit to May 19. Democratic leaders in the Senate have indicated that they will hold a vote on the bill in the coming days, and the White House has said that President Obama will sign it into law if it reaches his desk.

The change in strategy to extend the debt limit to May is no doubt in recognition of the fact that using a government shutdown as leverage is a dangerous game of chicken. It is a large gamble that the American public, or a good part of it, would reward Republicans for their willingness to do the hard thing in order to bring down the deficit. In all likelihood, a shutdown would result in another credit downgrade, a backlash in the markets, and a further diminution in the consumer confidence. If Republicans were to guess wrong and these other negative consequences ensued, the fallout could presage a significant re-alignment in American politics. That calculation could be the basis for the decision to defer the matter to May, allowing more time to negotiate spending cuts as part of a plan for a more lengthy extension.

As if this isn't enough, the forced spending cuts triggered by the delayed sequestration loom again in March. As a way to keep the President's feet to the fire, Republicans in Congress only agreed to a two month stay in the original sequestration date in the Fiscal Cliff legislation that was enacted after the 1 of January. The delay expires on March 1 and these impending dates present another opportunity to shut the government down. So it is likely that the price that must be paid to fund the government for the remainder of 2013 and avoid the sequestration will be strategic cuts to government spending rather than the automatic, across-the-board spending cuts of the sequestration.

With Congress focused on these critical, macro-economic issues, many have a hard time seeing them spending much time on other important issues facing the country, such as tax, health and immigration reform, energy, infrastructure, cyber-security and foreign policy issues. Hopefully the relevant committees of jurisdiction will initiate the consideration of these issues and will prepare to bring legislation to the floor in the second half of 2013 and the first half of 2014. To be sure, many in Washington are frustrated by the congressional focus on spending brinksmanship, including many committee leaders who are ready to begin legislating in other areas on which attention has not been focused for some time.