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By Jonathan Nicholson
Feb. 3 — If President Barack Obama wants to avoid more confrontations with congressional Republicans about the federal debt ceiling after March, the price tag could be steep: about $1 trillion.
That's the difference between where the debt subject to the congressionally-set limit is likely to be after mid-March and where the White House's Office of Management and Budget and the nonpartisan Congressional Budget Office say they expect it will be at the end of September 2016, only weeks before the next presidential election.
In the fiscal 2016 budget submission issued Feb. 2, the Obama administration projected the part of the national debt covered by the limit would hit $19.323 trillion at the end of fiscal 2016, which is Sept. 30. Similarly the CBO said in its outlook released Jan. 26 that it projected the debt to hit a slightly smaller $19.115 trillion.
As of Feb. 2, the amount totaled $18.060 trillion and is expected to rise March 15, when the suspension on the debt limit put in place in February 2014 (Pub. L. No. 113-83) expires. The Treasury Department said Feb. 2 that it expects to borrow about $155 billion on net in the January-March quarter through its regular debt auctions.
Absent a change in law, it remains unclear when the Treasury will be forced to choose between paying the government's bills or defaulting for the first time on U.S. government debt and thus how much new borrowing room the administration will seek. While the debt limit will reset in March, increasing on March 16 to include the amount of debt incurred while it was suspended, the Treasury can take various accounting moves to keep below the new limit for an extended amount of time.
The CBO said in its outlook that it didn't think the debt limit would be breached until September or October, a timeline that agrees with private sector estimates. Treasury Secretary Jacob J. Lew told members of the House Ways and Means Committee on Feb. 3 that the Treasury may not have a clear picture on the issue until it sees how strong the spring flood of individual income tax receipts is.
“CBO's estimates show that we have some period of time,” Lew said in response to a question from Rep. Aaron Schock (R-Ill.). “You asked me how long it goes. I don't think we have any kind of a crisis on March 15th. I can't tell you exactly how long it goes.”
“We've obviously started looking. But I won't be able to answer that question with clarity until we get through tax season and we know what our cash balance is,” Lew said.
Treasury may have more to say on the timing for another suspension period or an increase in the debt limit on Feb. 4, when debt management officials meet with reporters for their quarterly press conference on debt management issues.
While both House Speaker John Boehner (R-Ohio) and Senate Majority Leader Mitch McConnell (R-Ky.) have downplayed the likelihood of another showdown over the limit, as occurred in 2011, many Republicans see the White House's need for a debt limit boost as a key bargaining chip in any potential budget talks.
Unlike the last debt limit suspension, which was carried almost completely by Democrats in both chambers of Congress, a new boost in borrowing capacity will probably need a sign-off from congressional Republicans now in control of the House and Senate. The formula for getting a boost without disrupting borrowing may be hard to find, especially if the size of the request is seen as a large one.
In 2011, Boehner called for a one-to-one match of spending cuts with the size of the increase, a recipe dubbed “the Boehner rule.” After 2014, though, when no policy concessions were sought to accompany the latest suspension, some conservatives have said the Boehner rule has fallen by the wayside.
In an attempt to codify Boehner's approach, Sen. Rob Portman (R-Ohio), introduced a bill ( S. 333) calling for a dollar-for-dollar match in any debt limit boost. It would require the president to send legislation to Congress to match the proposed debt limit increase within 60 days of nearing the debt ceiling. It would also create procedural points of order against the House or the Senate considering such a request without spending cuts to match. The cuts could be made over 11 years but would have to exclude savings from lower interest payments.
“It's a tough row to hoe, because we're in such a hole,” Portman said. “It is a logical idea to say that while we're increasing the debt limit, that at least we have a dollar-for-dollar decrease in spending going forward.”
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