Debt Limit Rise May Not Be Needed Until June, CBO Says
The U.S. may be able to delay a debt-limit increase until as late as June 2014, the Congressional Budget Office said today.
Under an agreement reached last month, Congress suspended the debt limit through Feb. 7, 2014. After that, the Treasury Department will be able to use so-called extraordinary measures to stave off default, such as suspending investments of a retirement fund.
Income tax receipts increasing around the April 15 tax-filing deadline may provide enough revenue to meet scheduled payments as late as June, the CBO said.
“Given the volume of the government’s daily cash flows and the uncertainty about the magnitude of key transactions during those months, the Treasury could exhaust its extraordinary measures and authority to borrow as early as March or as late as May or June,” the CBO report said today.
The Bipartisan Policy Center estimated last month that the extraordinary measures would be exhausted between the end of February and late March.
Treasury Secretary Jacob J. Lew said yesterday that the extraordinary measures would last for about a month. One unknown issue is how the date will be affected by the Internal Revenue Service’s delay of the start of the tax filing season because of the government shutdown. That would push more refunds into the period after Feb. 7.
Congress came close to exhausting U.S. borrowing authority in August 2011 and again in October 2013. In 2011, lawmakers reached a bipartisan agreement to cut spending. This year, the debt-limit standoff ended with minimal policy changes.
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