With the $1 trillion fiscal 2014 spending deal now safely behind them, Congress and the White House must once again turn to the debt ceiling.
In the latest chapter of an all-too familiar ritual, Treasury Secretary Jack Lew warned Thursday during an appearance before the Council on Foreign Relations that the Treasury will run out of wiggle room and need additional borrowing authority by the end of February.
This was a revision of Lew’s previous guestimate that the Treasury could get along until early March without additional congressional authority – and it caught Senate Majority Leader Harry Reid (D-NV) by surprise. Reid dismissed a reporter’s question on Thursday about the need for action in the near future to avoid a default on U.S. debt, declaring, “This is not urgent” and that the Treasury could manage without fresh borrowing authority.
Reid’s office later amended the statement and deferred to Lew’s assessment that time was running out.
Under last fall’s agreement to end a 16-day government shutdown and budget crisis, Congress and the White House agreed to suspend enforcement of the debt limit until Feb. 7. Since President Obama first took office in January 2009, Congress has raised or suspended the debt ceiling seven times – including its decision in late October to suspend the borrowing limitation at $16.7 trillion.
The national debt is currently $17.2 trillion, which means lawmakers and the president must negotiate a new legal debt limit that authorizes Treasury borrowing well above that amount in the coming months.
The debt ceiling has been the source of some of the most bruising political skirmishes between Obama and congressional Republicans and led to a near-financial disaster in the summer of 2011, when the Treasury came within days of defaulting on its debt for the first time. In the past, House Speaker John Boehner (R-OH) has repeatedly demanded a dollar of spending cuts or reforms for every dollar of increased borrowing authority.
But Obama last year refused to negotiate the terms of a new debt ceiling, saying the government had to live up to its borrowing and spending decisions without conditions. And with the 2014 mid-term election campaign looming and the public disgusted with government gridlock and bickering, the speaker appears to have little interest in another protracted, messy battle over the debt ceiling.
At his weekly news conference on Thursday, Boehner said, “The president has not only made clear that he will not negotiate on the debt limit, he’s also made clear, as have Democrats on Capitol Hill, that they won’t talk about our long-term spending problem unless Republicans are willing to raise taxes. Republicans are not willing to raise taxes.”
He added, “So we find ourselves in a fairly difficult box.” Boehner said he didn’t know when the debt ceiling would need to be raised, but added that he supported raising it. This time, he didn’t mention any conditions for that action.
Senate Minority Leader Mitch McConnell (R-KY), however, has said Republicans will not agree to raise the debt limit without concessions on spending, according to The Washington Post.
House Republicans are expected to discuss the issue at their annual retreat in two weeks and are unlikely to put forward any plan on the debt ceiling before then.
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