For months it has appeared that Congress would need to raise the debt ceiling this summer, setting the stage for yet another big budget battle between Congress and the Obama administration.
Surprisingly, that big battle will be delayed until this fall.
A combination of rising tax revenue and slowing government spending will push the need for an increase in the debt ceiling until this fall, probably around October.
While it is good that the nation’s debt is rising more slowly than expected, pushing the debt ceiling battle off until this fall may cause bigger problems.
That’s because by fall, if this year is like every other year, Congress will be struggling to pass a few appropriations bills and developing continuing resolutions for other departments just to keep the government running. As a result the government will be dealing with two very contentions, but essential problems simultaneously,
With government borrowing approaching the debt ceiling, the House of Representatives is debating a bill that would allow the Treasury Department to only sell enough debt securities to keep current on existing public debt and Social Security obligations.
House Republicans say the bill is designed to take the risk of total credit default by the government off of the table if we have a budget impasse later this year. However, there is little chance such a bill would pass the Democratic-controlled Senate or be signed into law by the President even if it did.