Another manufactured crisis on the federal debt limit is looming as Congress returns from a weeklong recess and House Republicans continue their search for a new speaker.
Ultimately, Congress has no choice but to raise the debt limit to pay financial obligations that have already been incurred. Otherwise the government would default on some of those obligations.
But congressional procrastination has forced the Treasury to rely on “extraordinary measures” for months to avoid default. Last week Treasury Secretary Jack Lew warned lawmakers that these measures would be exhausted no later than Nov. 3, a couple days earlier than his previous estimate.
Some other estimates indicate lawmakers may have a little more time to act. But Concord Coalition Executive Director Robert L. Bixby cautions: “It’s kind of like predicting the trajectory of a knuckleball or predicting where a hurricane is going to hit. They really don’t know precisely . . . whether it’s going to be Nov. 19 or Nov. 3, they really don’t know.”
Other urgent matters are also piling up, including the need to renew authorization of federal transportation programs by Oct. 29. Congress also needs to approve spending plans for the fiscal year that began three weeks ago.
Last week the government reported that with a strengthening economy, the federal deficit for Fiscal 2015 was $439 billion — down from $483 billion the previous year. But the Congressional Budget Office projects that rising deficits will add $7 trillion to the debt over the next decade.
External links:
Lew’s Oct. 15 Letter to Congress
Bixby’s Comments to Congressional Quarterly on Debt Limit
Federal Debt and the Statutory Limit (CBO)
Debt Limit and Extraordinary Measures (CBO)
Analysis of Debt Deadline (BPC)
Market Response to Debt Impasses; Alternative Approaches (GAO)
Clock Ticks on Highway Funding (The Hill)
Budget Results for Fiscal 2015 (OMB/Treasury)
Final Fiscal 2015 Monthly Treasury Statement
August Update to Budget and Economic Outlook (CBO)
