CHAPTER NiNE • THE CoNgREss 219
Continuing Resolution
A temporary funding law
that Congress passes when
an appropriations bill has
not been passed by the
beginning of the new fiscal
year on October 1.The Continuing Resolution. In actuality, Congress has finished the budget on time
in only three years since 1977. The budget is usually broken into a series of appropria-
tions bills. If Congress has not passed one of these bills by October 1, it normally passes a
continuing resolution that allows the affected agencies to keep on doing whatever they
were doing the previous year with the same amount of funding. By the 1980s, continuing
resolutions had ballooned into massive measures.
Budget delays reached a climax in 1995 and 1996, when, in a spending dispute with
Democratic president Bill Clinton, the Republican Congress refused to pass any continu-
ing resolutions. As a result, some nonessential functions of the federal government were
shut down for twenty-seven days. Since then, Congress has generally managed to limit
continuing resolutions to their original purpose. This forbearance remained in effect even
during the successive budget crises that began in 2011.The Federal debt Ceiling. After gaining control of the U.S. House in 2011, Republicans
sought to use their control of the House to force cuts in federal spending. The result was a
series of confrontations between the Republican House and the Democratic president and
Senate. The most serious of these was the debt ceiling crisis of mid-2011.
If the federal government runs a budget deficit—if it spends more than it takes in—it
must issue new debt. The government has, in fact, run a deficit in most recent years. (The
exception was the four fiscal years from 1998 to 2001, when the budget had a surplus.)
Under current law, the national government is limited in the amount of debt it can issue,
and if the federal debt approaches the legal ceiling, Congress must raise the limit to allow
additional debt.
Raising the debt ceiling is entirely independent of the tax and spending decisions
reached by Congress—the ceiling must be raised to allow the government to fund activi-
ties that are already established by law. Many people mistakenly believe that raising the
ceiling is a prerequisite for new, future spending, but that is not the case. If the debt
ceiling is not raised as needed, the government might be forced to default on its existing
obligations.
Traditionally, members of Congress often “grandstanded” by voting against the debt
ceiling hike, even though passage was never in doubt. In 2011, however, House Republicans,
for the first time, sought to use the ceiling as a tool to force Democrats to accept spending
cuts. At the last minute, House Republicans and the Democrats under President Obama
reached a deal: if Congress could not agree on a spending-cut plan, a series of across-the-
board cuts known as the sequester would go into effect on January 1, 2013. Social Security,
Medicare benefits, and Medicaid would be exempt from cuts, half of which would come
from the defense budget. Congress then failed to agree on an alternative plan.
The Fiscal Cliff and the sequester. Tax rate cuts adopted in 2003 under the George
W. Bush administration were set to expire on January 1, 2013, at the same time that the
sequester was to go into effect. Other tax increases and spending cuts were scheduled for
January 1 as well. This series of deadlines, known as the fiscal cliff, put the Republicans at
a disadvantage. If Congress did nothing, the nation would experience large tax increases,
something the Republicans were sworn to oppose. In the end, Republicans agreed to a
tax rate hike on persons with incomes of more than $400,000 per year in exchange for no
increases for other taxpayers. The sequester was put off until March 1.
By March, most Republicans had concluded that large cuts to defense spending
would not be the disaster that they initially feared, and the sequester went into effect
on schedule. The budget conflicts were not over, however. House Speaker John Boehner
promised a confrontation over the next debt ceiling increase, scheduled for mid-2013.Copyright 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
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