News from Washington

News from Washington

UPDATE: President Obama signed a bill to increase the debt ceiling.  This includes cuts over the next 10 years, however what these cuts are is unclear.  The next step is to create 2012 fiscal budget bills, including the transportation bill, where the cuts will become apparent.  

The FAA shut down continues and looks like it won't be resolved until August recess is over.

The news out of Washington has been dominated by the negotiations over raising the nation’s debt ceiling prior to August 2nd.  The impacts of this debate for transportation are not clear – but with major cuts proposed for all “domestic discretionary spending” transportation is likely to be hit in the efforts to reduce the federal deficit- which will clearly be part of any deal to increase the debt ceiling.

The House planned to vote on a measure that would cut the deficit by $900 billion over the next 10 years in exchange for a commensurate increase in the debt ceiling. The White House has threatened to veto the House GOP bill even if it makes it through the Democratic-controlled Senate. Still, getting the newly modified House plan passed on Thursday was seen as an important step toward finding a compromise.

A failure by Congress to raise the $14.3 trillion federal debt limit would lower the nation's credit rating and raise borrowing costs for states as well as 7,000 cities, counties, universities and non-profits. That's partly because many interest rates — for everything from municipal bonds to mortgages — are benchmarked to U.S. Treasuries.

Depending on whether or not a deal is reached by August 2nd or sometime in that timeframe and the specifics of the proposal, transportation funding to Minnesota is likely to be impacted.  

According to an analysis by the well-respected Bipartisan Policy Commission (BPC) there would be barely enough funding, without an increase in the debt ceiling, to pay interest, Social Security, Medicare and Medicaid, defense, and unemployment benefits.

The Bipartisan Policy Center has released a report on what will happen to various federal programs if the United States fails to raise the debt ceiling by August 2. After that date, according to the report, U.S. spending will be limited to its intake of roughly $172 billion for the rest of August. That means funding to certain programs will abruptly cease. The question, of course, is which programs.


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