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Sept. 13 — Lawmakers won't have to take action on the federal government's debt limit again until at least the middle of the summer of 2017, the Bipartisan Policy Center said.
The debt ceiling, which is currently suspended through mid-March 2017, has taken on a higher profile since Republicans took control of Congress in 2011. Republicans have tried to use the threat of not increasing or suspending it to force the White House to make policy concessions, with varying degrees of success. Should Democrat Hillary Clinton succeed Barack Obama and Republicans continue to control Congress, the debt limit could be at the center of a first-year confrontation with Congress.
“BPC’s projections show that the use of available extraordinary measures would allow the federal government to continue meeting all of its obligations until at least mid-summer of 2017,” wrote Shai Akabas, director of fiscal policy at the BPC, in a blog posting on the think tank's website.
“Ultimately, sometime in the months thereafter, the federal government would be unable to continue making all payments in full and on time—a date that we refer to as the ‘X Date,'” Akabas said. “This is when extraordinary measures would be completely exhausted and Treasury would have insufficient cash on hand to cover all of its bills.”
Technically, the debt limit has only been suspended, not increased, through March 15, 2017, thanks to a law enacted Nov. 2, 2015 (Pub. L. No. 114-74) that boosted the annual discretionary spending caps. On March 16, the limit will increase to accommodate the debt incurred while it was suspended, thus forcing the Treasury Department to take accounting moves to keep below the new limit.
Those accounting moves, referred to by Treasury as “extraordinary measures,” usually buy several months' worth of borrowing capacity for Treasury, but the exact amount of additional time varies and depends on the time of year, cash flows and the underlying deficit picture.
In an interview, Akabas said the group was reluctant to estimate an end date by which the debt limit must be raised or suspended or risk government debts going unpaid, largely because it was so far in the future. However, Akabas said he did believe the end date was sometime in 2017.
Two previous suspensions that ended in the spring saw the Treasury Department make it into the fall before running out of borrowing room. In 2013, a May suspension end allowed Treasury to keep borrowing until October, while in 2015 a March suspension end saw Treasury able to keep borrowing until November.
Akabas said there was no guarantee that pattern would repeat in 2017. “We're running bigger deficits than we were years ago,” he said.
The CBO has projected a $590 billion deficit for fiscal year 2016, which ends Sept. 30, which would be the first increase in the annual deficit since 2011. The Treasury Department released August budget results that showed the forecast likely to be hit. The government ran a $107.1 billion shortfall in August, on $231.3 billion in receipts and $338.4 billion in spending, the monthly report said. The Treasury results were close to the CBO's August projection of a $108 billion deficit, made Sept. 8.
Despite the prospect of higher budget gaps ahead, the deficit and debt have failed to gain much traction politically in 2016. Even on Capitol Hill, rhetoric on the deficit has been relatively muted. A Republican bill (H.R. 3590) that would add $32.7 billion to the deficit over 10 years by making a change to the Affordable Care Act passed the House with some bipartisan support Sept. 13, 261-147.
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