WASHINGTON – Congress has at least until July to broker a bipartisan deal on the debt if lawmakers are to avoid a first-ever default, according to the Congressional Budget Office.
The impartial scorer, who typically details how much the legislation would cost, released a report Wednesday that said US lawmakers and the Biden administration have until between July and September to raise or suspend the debt limit.
CBO, however, cautioned in its report that the window is uncertain, as the amount of money flowing into the federal government from taxes and other sources of revenue fluctuates, as does the amount of money distributed for programs ranging from social security and Medicare to military salaries to public land programs.
“Notably, tax revenues in April could be higher or lower than the CBO’s estimates,” the report said. “If these revenues are less than the estimated amounts … the extraordinary measures could be exhausted earlier and the Treasury could run out of funds before July.”
Struggles over the debt limit
Congress has voted three times during the Trump administration to suspend the debt limit, with all votes garnering bipartisan support.
Congress voted once during the Biden administration to raise the debt limit, although the House and Senate passed that legislation without the support of an overwhelming majority of Republican lawmakers.
That $2.5 trillion increase to the nation’s borrowing capacity that Democrats passed last year petered out last month, when the nation’s debt limit hit its $31.4 trillion mark.
Treasury Secretary Janet Yellen has since used accounting measures called extraordinary measures to ensure that the federal government can continue to pay all its bills in full and on time, but those measures are expected to expire between July and September, according to the analysis of the CBO extension.
If that were to happen without a new debt limit law, the Treasury Department would no longer be allowed to borrow money to pay for any programs that Congress has passed.
Since the nation never reached that point, it’s unclear what exactly would happen.
But the federal government would simply spend the money it has on hand, leading to sweeping cuts to government programs that officials may or may not be able to direct.
Yellen has repeatedly warned Congress not to get too close to the default date, sometimes called the x date.
“Failure to meet government obligations would cause irreparable damage to the U.S. economy, the livelihoods of all Americans, and global financial stability,” Yellen wrote in an early January letter warning of the debt cap. .
“Indeed, in the past, even threats that the US government might default on its obligations have done real damage, including the only credit rating downgrade in our nation’s history in 2011.”
Biden budget request coming soon
President Joe Biden, speaking from Lanham, Maryland, Wednesday afternoon, said the budget request he plans to release on March 9 would reduce the deficit by $2 trillion over the next decade, though he rejected calls by the GOP to tie debt limit negotiations and federal spending together.
“Some of our Republican friends in the House are talking about taking the economy hostage on the full trust and credit of the United States,” Biden said. “They say that if I don’t accept their economic plans, which are totally irresponsible, they won’t pay the national debt, which has taken 200 years to build up.”
Biden has called on House Republicans to release a budget for the upcoming fiscal year. She said that after that, they can sit down and talk about what issues Democrats and Republicans agree on and negotiate areas where they differ about how the federal government spends money or generates revenue.
But Biden said he made it clear to President Kevin McCarthy, a California Republican, and other GOP lawmakers in his State of the Union address that he “will not negotiate whether or not we will pay our debt.”
