The next GOP-led crisis is on the horizon—the debt limit needs to be raised again, preferably now, but things get really dire in October or November, according to the
Congressional Budget Office.
Treasury Sec. Jacob Lew sent a letter Friday relaying the ominous news to Speaker John Boehner, Minority Leader Nancy Pelosi, and others.
Beginning on Monday, March 16, the outstanding debt of the United States will be at statutory limit. Absent an increase in the debt limit, the Treasury Department will have to take extraordinary measures to continue to finance the government on a temporary basis.
Okay, "extraordinary measures" are accounting tricks that Treasury has used before to avert immediate disaster, but the limit does have to be raised by fall … or else. Remember? The U.S. government won't be able to pay its bills, we'll lose our good credit standing in the world and a whole slew of terrible consequences will stem from that, including a sucker punch to the U.S. economy just as the recovery seems to be getting more real by the month.
This is the first time since the era of debt limit brinksmanship began that a Republican-controlled Congress will be responsible for raising the ceiling.
The 2011 debt limit fight resulted in sequestration—the across-the-board cuts to government spending that are still slicing agency budgets to this day. In 2014, House Republicans finally agreed to raise the debt ceiling without condition, but only because they had just suffered a major loss of public confidence from forcing a government shutdown toward the end of 2013. (And by "agreed," we mean Boehner let the bill come to the floor for a vote and 193 Democrats carried it across the line with help of 28 Republicans.)
So what will the GOP take hostage this time in exchange for agreeing not to torpedo the entire U.S. economy? It's unclear, reports Brian Faler.
Republicans have no clue what, if anything, they will demand in exchange for raising the debt cap.
“These conversations are really in their nascent stage,” said House Budget Committee Chairman Tom Price (R-Ga.), who said he prefers returning to the so-called Boehner rule, requiring spending cuts at least equal in size to any increase in the debt ceiling. “I don’t know what we will ultimately decide.”
Whatever that decision may be, Leader Pelosi does not seem hopeful. In
a Friday statement, she urged the House GOP to "act swiftly" to avert a self-inflicted wound.
“The Treasury Secretary’s letter is another reminder of the consequences of Republicans’ culture of crisis. There is no reason that the Republican Congress should not act immediately to take the prospect of a catastrophic default off of the table. Failure to act would have savage impacts on American families: tumbling retirement savings and soaring interest rates for student loans, mortgages, credit cards, and car payments.
And let's just keep in mind that raising the debt limit doesn't authorize new spending, it only allows the government to pay the bills that Congress has already racked up.