The next deadline for raising the debt ceiling is expected in mid-summer 2019, posing a federal spending challenge for the new House Democratic majority.
The Bipartisan Policy Center on Thursday issued a new estimate of government borrowing and projected that the U.S. spending limit will be breached shortly before next fall unless Congress takes action.
Congress agreed to suspend the debt ceiling until March 2, 2019, at which point it will be reinstated at whatever the debt level is at the time, likely around $22 trillion.
{mosads}But the Treasury Department in recent years has delayed an associated fiscal crisis by using so-called “extraordinary measures” to continue paying the government’s bills after the debt ceiling has been reached. Those measures are a way to circumvent the law that bars the Treasury from borrowing beyond the debt limit to pay the country’s bills.
Once the measures have been exhausted, the U.S. would default on its debt, leading to financial calamity unless Congress acts to raise the limit.
In recent years, conservative Republicans have used the debt limit as a negotiating tool to extract concessions on debt reduction and other GOP priorities, a tactic that sent jitters through financial markets worried about a potential default on U.S. government debt.
“Our long-term debt path is reckless and potentially dangerous for the future of our economy, but the debt limit in its current form carries unacceptable costs and risks,” Shai Akabas, the Bipartisan Policy Center’s economic policy director, said on Thursday.
The combination of increased spending and the GOP tax law from 2017 have inflated the deficit, which is expected to surpass $1 trillion this fiscal year.
In October, the deficit reached $98 billion, according to the nonpartisan Congressional Budget Office.
The other main drivers of the deficit are mandatory spending programs such as Social Security, Medicare and Medicaid.