The president and lawmakers continued to meet to try and reach agreement on how to end the government shutdown and also raise the debt ceiling to avoid defaulting on government obligations. Treasury Secretary Jack Lew discussed the necessity of raising the debt limit at a Senate Finance Committee hearing on October 10, noting that, if Congress does not act and the United States suddenly cannot pay its bills, the repercussions would be serious. Earlier in the week, President Obama urged House Speaker John Boehner, R-Ohio, to hold a vote on a clean bill to fund the government one day after Boehner claimed there were not enough votes in the House to pass the measure. The IRS issued a reminder that the lapse in federal appropriations does not affect the federal tax law, and all taxpayers should continue to meet their usual tax obligations.
White House
At an October 10 Senate Finance Committee hearing to discuss the necessity of raising the debt limit, Lew kept his remarks brief and to the point, saying the repercussions would be serious if the government defaulted (TAXDAY, 2013/10/11, C.1). Committee Chairman Max Baucus, D-Mont., who has put tax reform on the back burner once it became apparent that Democrats and Republicans were digging in their heels over their differences in funding government operations and raising the debt limit, said the two sides must work together and return to regular order. Sen. Mike Crapo, R-Ida., told Lew that the administration has not dealt with entitlements and that is what Republicans want to talk about. Ranking member Orrin G. Hatch, R-Utah, reminded Lew and fellow members that the president has signaled that he would entertain a short-term increase in the debt limit, which Hatch said sounded like a willingness to negotiate terms.
During an appearance at the Federal Emergency Management Agency (FEMA) headquarters in Washington D.C., on October 7, the president pressed Boehner to hold a vote on a clean continuing resolution (TAXDAY, 2013/10/08, W.1). Obama said, if Republicans and Boehner do not believe they have enough votes, then they should prove it and hold a vote on the floor. In an appearance on ABC’s "This Week with George Stephanopoulos" on October 6, Boehner said that not enough House lawmakers would support passage of clean continuing resolution that does not include provisions to defund or delay the new health care law. Boehner noted that Republican leaders are open to the idea of talking to the president to resolve the budget crisis and raise the debt ceiling.
Also on October 7, National Economic Council Director Gene Sperling reiterated that the president is willing to negotiate with Republicans over a budget deal, as long as it does not involve the debt ceiling (TAXDAY, 2013/10/08, W.1). He said the president has made clear that threatening default has to end. Sperling, speaking at Politico’s Playbook Breakfast in Washington, allowed that Obama was willing to accept a short-term agreement on the debt ceiling in order to prevent a default.
Congress
Baucus and Senate Majority Leader Harry Reid, D-Nev., on October 8 introduced legislation to suspend the debt limit until December 31, 2014 (TAXDAY, 2013/10/10, C.1). Similar legislation was passed by the House by a vote of 285 to 144 and Senate by a vote of 64 to 34 in January 2013 to suspend the debt limit until May 19, 2013. Since May, the U.S. Treasury has been juggling its checkbook to prevent the country from defaulting on its bills. With an October 17 deadline to extend the debt limit fast approaching, Reid said he plans to start focusing on the debt limit as a means to also resolve the funding issue in advance of that deadline and the absolute drop-dead date of October 30, as claimed by some economists.
Leaders from the House and Senate continued to meet behind closed doors to figure out a way to end the current impasse over funding the federal government, while the House on October 9 continued its piecemeal approach to funding the government, passing legislation to fund the Federal Aviation Administration (FAA) and a measure, the Honoring the Families of Fallen Soldiers Act (HJRes 91), to ensure that death benefits for families of fallen troops will continue to be disbursed during the government shutdown (TAXDAY, 2013/10/10, C.1). The Senate approved, and the president signed, HJRes 91 on October 10.
The employer mandate in the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) is hurting job growth and employment, according to House Small Business Committee Chairman Chris Collins, R-N.Y. (TAXDAY, 2013/10/11, C.3). At an October 9 hearing, Collins said the PPACA is exacerbating the problem of businesses hiring fewer full-time workers because the law arbitrarily defines a full-time employee as someone who works 30 hours or more each week. Ranking member Janice Hahn, D-Calif., agreed that the 30-hour-per-week definition has caused debate among both employers and unions, but suggested that Congress wait to gauge enrollment in the PPACA’s individual and small business health care exchanges before making changes to the law.
House Oversight and Government Reform Committee Chairman Darrell Issa, R-Calif., and Rep. Jim Jordan, R-Ohio, questioned whether Sarah Hall Ingram, director of the IRS’s Affordable Care Act Office, targeted conservative groups for extra scrutiny (TAXDAY, 2013/10/11, C.3). Ingram testified at an October 9 committee hearing that she had not broken any taxpayer privacy laws while serving as commissioner of the IRS Tax-Exempt and Government Entities Division. She also testified that the IRS implementation of the PPACA was on track.
IRS
Despite the federal government shutdown that has resulted in approximately 90 percent of its employees being placed on furlough, the IRS issued a reminder that this current lapse in federal appropriations does not affect the federal tax law, and all taxpayers should continue to meet their usual tax obligations (IR-2013-80; TAXDAY 2013/10/09, I.1). Individuals and businesses should keep filing their tax returns and making deposits with the IRS, as required by law.
By Jeff Carlson, Stephen K. Cooper and Jennifer J. Rodibaugh, CCH News Staff