Debt limit could hit same day as government funding runs out

Congress may be faced with the prospect of facing deadlines to raise the debt ceiling and fund the government at the same time in the fall, the same coincidence of events that has set up major fiscal standoffs in past years.

The Bipartisan Policy Center, a nonpartisan think tank, reported Thursday that the date when Congress has to raise the debt ceiling probably will fall in October or November, with a particular danger related to federal payments that fall on the first day of the new fiscal year, which is Oct. 2.

The first day of the new fiscal year is also likely to be a deadline for government funding. Currently, the government is funded through late April and it will be up to Congress to vote for how long to extend it.

The deadlines for funding the government and raising the debt ceiling roughly aligned in fall 2013, when the government was mostly shut down for two weeks and the Treasury came close to missing payments because of a standoff between former President Barack Obama and congressional Republicans over Obamacare.

The relevant deadline for the debt ceiling is not when the debt actually hits the debt ceiling. That will occur March 16, thanks to Congress previously suspending the limit, at about $20 trillion. At that point, the Treasury can make use of “extraordinary measures” — effectively, moving federal government accounts around — to continue paying incoming obligations and interest and principal on the debt for several months.

But at some point in October or November, the Bipartisan Policy Center warned Thursday, those measures will be used up. Then, the Treasury will be unable to guarantee that all payments will be made on time and in full — a point that the think tank refers to as the “X-Date.”

“Policymakers should address the debt limit well in advance of the ‘X-Date’ range if they want to guarantee that the Treasury can continue to pay all of its bills in full and on time,” said Shai Akabas, the group’s fiscal policy director.

This post originally appeared on Washington Examiner


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