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News Link • Day of Reckoning

Debt ceiling returns, creating new headache for GOP

• The Hill

Lawmakers will have until sometime this autumn to raise the debt ceiling before the Treasury runs out of ways to make essential payments, putting the nation at risk of its first-ever debt default.

The debt limit is a major test for the Trump administration and Republican congressional leaders who've sought major spending cuts before previous increases in the debt ceiling.

The White House and Treasury Secretary Steven Mnuchin are pushing lawmakers to raise the ceiling as soon as possible, and Senate Majority Leader Mitch McConnell (R-Ky.) said Tuesday that Congress will "obviously" increase the limit.

But the highly charged political atmosphere, demands from fiscal conservatives, record high debt levels and the perpetual wild card that is Trump all make a quick and easy increase in the borrowing limit unlikely. 

Democrats have warned that Republicans shouldn't count on their votes.

"We're not going to get what we want. We understand that. But if they think they're going to get everything they want, then they're going to have to get it with their votes," said House Minority Whip Steny Hoyer (D-Md.).

The debt ceiling was temporarily suspended in November 2015 through a budget deal negotiated by President Obama and then-Speaker John Boehner (R-Ohio). That deal waived the debt ceiling until March 15, retroactively approving all borrowing up to that time.

Mnuchin urged congressional leaders last week to raise the debt ceiling "at the first opportunity," while the Treasury takes extraordinary measures to pay bills without adding to the country's roughly $20 trillion debt. Those measures include stopping payments into certain government funds, halting certain bond sales and selling government-held securities.

"There's some expenses associated with it," said Maya MacGuineas, president of the nonpartisan debt watchdog Committee for a Responsible Federal Budget. "It's a little ponzi scheme with government trust funds, but in the end, everyone remains whole."

The Treasury can likely delay the need to raise the debt ceiling until October or November, according to the nonpartisan Congressional Budget Office. At that point, Treasury will have exhausted extraordinary measures and would need to borrow more money to pay the country's bills. 

Lawmakers have squabbled over raising the debt ceiling, with the stakes escalating in recent years. The 2011 standoff over led to the creation of the sequester: automatic cuts touching every part of the federal budget, a policy now loathed by both parties for different reasons. 

Republicans have previously demanded spending cuts or entitlement reforms for raising the debt ceiling, and leaders have been mum about what they'd seek this time around.

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