Will Congress Ever Resolve the Debt Ceiling?
The threat of federal default has been postponed until August. The U.S. Congress approved a plan on Thursday to temporarily remove the national debt ceiling and allow the government to continue spending. Previously, national debt had been legally limited to $16.4 trillion. Without this measure, the Obama administration had estimated that the U.S. Treasury would run out of funds by early March.
The plan agreed upon by lawmakers in the U.S. House of Representatives is an unusual one. The debt limit will not be enforced through May 18, allowing the government to continue borrowing money to pay the nation’s bills, including Social Security checks, the military payroll, and interest payments on existing debt. On May 19, the debt ceiling will be put back in place, but at a much higher level, allowing further borrowing. At this time, The Washington Post reported, the Treasury Department will be able to take “extraordinary measures” to keep funding its financial obligations.
As the Bipartisan Policy Center told the publication, the country will likely add a further $450 billion to the national debt during that time.
Congress’ plan also included a provision that requires lawmakers to draft a budget blueprint by April 15. If they miss this deadline, their paychecks will be withheld and placed in escrow until 2015, when this current legislative session comes to an end.
But Congress has other deadlines to worry about as well. It must find a solution to avoid the mandatory budget cuts before the sequestration delay expires on March 1, as agreed upon in the deal made to avoid the fiscal cliff. If not, the automatic deep spending cuts will hit the Pentagon and numerous other federal agencies, potentially bringing further harm to the nation’s economy.
March 27 is another deadline. On that day Congress faces the expiration of a funding bill, which could cause a government shutdown.