Debt ceiling deadline likely delayed until October: study
The deadline for Congress to lift or suspend the debt limit will likely not hit until October or early November, according to a Bipartisan Policy Center (BPC) analysis, a timing tweak that could help ease along a deal.
Congress must raise the debt limit in order to prevent a debt default, which would lead to a financial crisis. Earlier projections had put the deadline as soon as September, a few weeks ahead of the Sept. 30 spending deadline to prevent a government shutdown.
{mosads}With the debt deadline now expected in October, Congress will have breathing room to bundle it with either spending legislation or a continuing resolution to keep the government’s lights on when the new fiscal year begins on Oct. 1. They could also use the debt limit raise to force a reluctant President Trump to sign spending legislation he might otherwise reject.
The debt limit constrains the Treasury Department from borrowing money to pay out existing debts. The U.S. technically reached the limit earlier this year, and has been running a series of “extraordinary measures” to fund new debt, borrowing from internal government accounts that do not technically add to the debt.
If those avenues are exhausted, as BPC projects they will be in October or early November, the U.S. government would default on its debt, an unprecedented event that would send shock waves through the global financial system.
“The risks to taxpayers, the U.S. economy, and global markets are growing by the day,” said Shai Akabas, BPC’s director of economic policy.
“Rather than putting the economy at risk and wasting taxpayer money through higher interest payments, Congress should act now to extend the debt limit,” he added.
In recent years, the debt limit has been used as a political football, most notably by conservatives in the Republican party who have sought to use it as a leverage point to force spending reductions.
The Trump administration has pressed for Congress to quickly lift the debt limit, and Democrats have largely signaled that they do not intend to use it for leverage. But Congress could try to use the must-pass measure to force Trump’s hand on a spending deal.
Trump is reportedly interested in employing a continuing resolution to keep current spending levels in place rather than accept a spending deal that would continue to increase spending on both defense and nondefense spending.
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