Obama Wins Congressional Passage of Legislation


With the threat of a U.S Treasury default on debt lingering, President Obama has won a key Congressional vote, lifting the borrowing cap and allowing the Treasury to borrow more in order that it may service pending repayments of debt. Both parties have been attempting to find a workable solution to the problem in order to avoid causing perhaps the biggest shock to global financial markets since the collapse of Lehman Brothers in 2008.

The Background
As seems to happen every year, the Democratic President and Republican Congress have come to loggerheads over lifting the cap ceiling. The cap ceiling is the legally specified amount which the Government can borrow. Due to the ‘separation of powers’ in the USA, the executive branch, the Presidency and his Government, must gain Legislative (Houses of Congress) approval in order to legally increase the debt of the country. Therefore there have been inherent tensions since 2012 when the Republican Party swept the mid-term elections taking control of both houses and having the power to cripple the country financially, by refusing to authorize an increase in spending. With the checks and balances, the President has the power to veto any law passed by Congress, causing various stalemates during the President’s second term in office.

Negotiation

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With the deadline looming, representatives of both parties have been locked in frantic negotiations attempting to find some kind of compromise. Majority Senate Leader Mitch McConnell and recently retired Speaker of the House John Boehner have represented the Republican Party in negotiations with the President’s staff and the Minority Leader Nancy Pelosi in an attempt to find a solution to the impending issue. The vote took place in the senate and was a passed 64-35, with more conservative Republican senators voting against the motion, saying it did not go far enough. The Republican Party negotiators pointed to the savings in social welfare, estimated at $168 billion long term, rejected tax increases, and saw the fact some of the money must be invested directly into military projects as a sign of success.

The Presidential Hopefuls

With the Republican Party nomination race gaining steam, it was inevitable that those on the right of the party would take the opportunity to have their say during the debate. Rand Paul, son of maverick Ron Paul and Senator for Kentucky, used his speech to compare the deal to a; “secret handshake,” where the Republican Party claims a victory based on military spending and Democrats gaining more for welfare. Another presidential candidate, Ted Cruz the Senator for Texas, claimed that the party had handed President Obama limitless spending moving forward.

Moving Forward
President Obama will sign the bill into law at the first opportunity but the struggle has just begun. Both Houses must now assign the minutiae of where the money will be directed and spent. Expect Planned Parenthood, the Dodd-Frank Act and regulations on carbon emissions to be some of the initiatives in the Republican crosshairs.

With the passing of the Bill, the potential for debt default has passed for now. The President has won a victory of sorts, but the battle is only just beginning.



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