After a 13-month hiatus, the debt limit is set to return to the national spotlight when it will be reinstated Monday and raised to the debt’s current level.
What the Treasury Department calls “extraordinary measures,” however, would allow the government to keep borrowing until this fall, according to the Congressional Budget Office. It notes that the current debt subject to the limit is about $18.1 trillion, roughly twice what it was in 2007.
The Treasury most recently resorted to such measures in 2011 and 2013 as Congress dragged its feet on increasing the limit.
The limit must inevitably be raised so the government can meet financial obligations it has already incurred. Lawmakers should increase it sooner rather than later, avoiding the consequences of delay. These may include greater uncertainty in the financial markets and growing doubts about the government’s creditworthiness.
Senate Majority Leader Mitch McConnell indicated over the weekend that Congress will wait until later in the year to increase the debt limit, but he insisted lawmakers will not cause the government to default on its obligations.
Treasury Secretary Jack Lew, however, recently called on Congress to raise the limit “without controversy or brinkmanship” as soon as possible.
External links:
Federal Debt and the Statutory Limit, March 2015 (CBO)
Senate Leader McConnell Promises No Default on Debt (Reuters)
Treasury Secretary Lew’s Debt Limit Letter to Congress
Understanding the Federal Debt Limit (Concord)
