Daily Tax Update - October 3, 2013: House Majority Leader Plans to Offer More Piecemeal Bills to Fund Government

House Majority Leader Plans to Offer More Piecemeal Bills to Fund Government:  Today, House Majority Leader Eric Cantor said that he planned to offer more bills to partially fund the government even though President Obama has vowed to reject them.  In a memo today, Cantor said "I am confident that if we keep advancing common-sense solutions to the problems created by the shutdown that Senate Democrats and President Obama will eventually agree to meaningful discussions that would allow us to ultimately resolve this impasse.”  The memo added, “The American people . . . expect us to work together and they will not countenance one party simply refusing to negotiate."  Cantor’s memo added, “One can only speculate as to why President Obama and Congressional Democrats are not only refusing to negotiate but now refusing to support or provide the American people with relief from the government shutdown.  But I firmly believe their position is untenable.  It is at odds with how even past Democratic Presidents have handled similar situations.  I expect that in addition to these bills, we will consider other similar pieces of legislation to reopen critical operations of the federal government.”

Meanwhile, a bipartisan group of House members offered a potential compromise to end the stalemate.  Their plan would fund the government at current sequestration levels and repeal the 2.3 percent medical device excise tax.  Senate Majority Leader Harry Reid said, “ We're willing to talk about that and anything else.”  However, Reid said that the government must reopen before such negotiations begin.

Treasury Report Warns of "Catastrophic" Potential if Debt Limit Not Raised:  Today, the Treasury Department issued a report that states that, if the debt limit is not raised by October 17, a default would be “unprecedented and has the potential to be catastrophic.” 

The report concludes that “credit markets could freeze, the value of the dollar could plummet, and U.S. interest rates could skyrocket, potentially resulting in a financial crisis and recession that could echo the events of 2008 or worse.”  The report also notes that “even the possibility of a default could roil financial markets and damage the economy, thereby harming American businesses and households.”

Treasury Secretary Jacob Lew said, “As we saw two years ago, prolonged uncertainty over whether our nation will pay its bills in full and on time hurts our economy.  Postponing a debt ceiling increase to the very last minute is exactly what our economy does not need – a self-inflicted wound harming families and businesses.  Our nation has worked hard to recover from the 2008 financial crisis, and Congress must act now to lift the debt ceiling before that recovery is put in jeopardy."