Think tank: Next debt limit deadline could wait until February

Bipartisan Policy Center's projection could give Congress more time to act

A statue of former Treasury Secretary Albert Gallatin stands in front of the Treasury Department in Washington. (Bill Clark/CQ Roll Call file photo)
A statue of former Treasury Secretary Albert Gallatin stands in front of the Treasury Department in Washington. (Bill Clark/CQ Roll Call file photo)
Posted October 29, 2021 at 10:16am

A Washington think tank with a strong track record predicting Treasury Department cash flows is projecting that the recent $480 billion statutory debt limit increase could last as long as mid-February, but that Treasury also could run out of borrowing room and cash as soon as mid-December.

The Bipartisan Policy Center’s forecast, if accurate, would give lawmakers potentially more time to act to raise the debt limit again than other recent projections. Wrightson ICAP, an investment advisory firm, has put the likely time when Treasury would run out of enough cash and borrowing room to pay all the government’s bills between mid-December and mid-January.

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The BPC said it remains more difficult than usual to pinpoint what it calls the “x date” because of the uncertainty of spending on the pandemic and the economic recovery.

In addition, Shai Akabas, the BPC’s director of economic policy, said a factor that could quicken the exhaustion of borrowing room is House passage of the bipartisan Senate-passed infrastructure bill. The bill includes a $118 billion transfer from the Treasury’s general fund to shore up the Highway Trust Fund.

It’s unclear when the House will take up the infrastructure bill after Congress on Thursday night cleared a temporary extension of surface transportation programs through Dec. 3. Progressive lawmakers balked at taking up the broader five-year bipartisan bill, but said they’d be ready to vote for that as soon as the $1.75 trillion reconciliation package is finalized and endorsed by all 50 Senate Democrats.

But the BPC said a full transfer, whenever it might occur, would increase what's known as intragovernmental debt, or Treasury debt owed to federal trust funds, and thereby eat up some borrowing room. Akabas said the “clock is ticking for Congress to once again protect the full faith and credit of the United States.”

The $480 billion debt limit increase brings the total to $28.9 trillion after President Joe Biden signed that measure Oct. 14. The increase was estimated at the time to last until at least early December.

After the debt limit was raised, Treasury Secretary Janet L. Yellen continued what is called a “debt issuance suspension period,” allowing the agency to continue to use accounting measures to temporarily avoid breaching the debt ceiling and continue borrowing. The BPC said by continuing the suspension period rather than ending it and restarting extraordinary measures, the Treasury was able to extend its borrowing range by a week or two.

No matter when the next deadline becomes a reality, Democrats have few good options for dealing with the debt ceiling.

Senate Republicans say they won’t supply the votes to get past the 60-vote cloture threshold next time, demanding instead that Democrats use the complex and time-consuming budget reconciliation process.

Democrats are reluctant to do so because of unanswered parliamentary questions about how that would work, the amount of committee and floor time it would eat up and the political optics of pushing the debt ceiling past $30 trillion. Some are coming around to the possibility that reconciliation might be their best option, however.