Well, it’s official now: The U.S. government on Friday breached the current debt ceiling. Congress probably has until the end of February to raise the cap before the Treasury begins to default on its borrowing for the first time ever.
The government’s borrowing cap of $16.69 trillion was suspended last October as part of a bipartisan budget deal that ended the 16-day government shutdown and gave Congress until early this year to pass a new budget and get the government’s fiscal house in order. Today was the deadline for reinstituting the old debt ceiling unless lawmakers and the White House could agree on a new, higher borrowing level.
Related: Debt Ceiling Drama: Will You Get Your Tax Refund on Time?
But with House Speaker John Boehner and his Republican members at odds over whether to demand concessions from President Obama – such as approving the Keystone XL pipeline or rescinding recent cuts in benefits for some military retirees – in return for voting to raise the debt ceiling, the government has officially exceeded its current borrowing authority by about $590 billion. As of this morning, the national debt stood at $17.285 trillion.
Washington has long spent more money than it takes in, and must make up the difference by borrowing. Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend or revise the definition of the debt limit – 49 times under Republican presidents and 29 times under Democratic presidents
Treasury Secretary Jack Lew warned again this week that his department will exhaust a series of “extraordinary measures” or bookkeeping tricks to avoid actually defaulting on its borrowing by the end of this month. The last time the government came within a day of defaulting, back in the summer of 2011, Standard & Poor’s cut the rating of the government’s long-term federal debt by a notch, from the top grade of AAA to AA+.
Related: Boehner Emphatic: There Will Be No Default on the Debt
Boehner declared at a news conference on Thursday, “We do not want to default on our debt, and we will not default on our debt.” But it was far from clear how he hoped to break the deadlock within his own conference and pass a bill that is acceptable to Senate Democrats and the White House before the end of the month.
Politico reported this afternoon that House Republicans were getting close to introducing a bill that would lift the debt limit until the first quarter of 2015, while patching the Medicare reimbursement rate for nine months and reversing the recent changes in military retirement benefits. The bill could come up for a vote as soon as next week.
Patching the reimbursement rate for doctors who treat Medicare patients — known as doc fix” — and restoring some cost of living benefits for the military would be costly. Under the emerging plan, House Republicans would seek to pay for those items with an extra year of cuts to mandatory spending and changes to pension contributions.
“In this fragile economic recovery the last thing workers and businesses need is another round of Republican debt limit drama,” Senate Budget Committee Chairwoman Patty Murray (D-WA) said on Friday. “There’s no reason to drag this out any longer.”
This article was updated at 4:40 P.M.
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