With the fate of the federal debt ceiling once again in play, Senate Majority Leader Mitch McConnell (R-KY) on Sunday renewed his vow to avert another crisis over the Treasury’s borrowing authority.
Treasury Secretary Jack Lew warned Republican and Democratic congressional leaders on Friday that the U.S. will hit its statutory debt limit on March 16, setting the stage for another potential showdown between lawmakers and the White House over spending and Obama administration policies.
Raising the debt ceiling has been one of the most onerous political chores historically because neither party wants to be seen by voters as profligate spenders. Both sides seek political advantage in striking the terms of a new borrowing level.
Congress came within hours of allowing the first default in U.S. history in the summer of 2011. Then it took a 16-day government shutdown in the fall of 2013 before the Obama administration and congressional Republicans agreed on a new budget and timetable for raising the debt again.
In February 2014, Congress passed the Temporary Debt Limit Extension Act, suspending the statutory debt limit at $17.3 trillion through March 15, 2015. Congress will probably have to raise the debt ceiling by $1 trillion or so to cover the additional borrowing done over the past year, according to a Bipartisan Policy Center estimate.
During an appearance on the CBS News’ Face the Nation, McConnell said he intends to make good on his post-election promise to avoid another political standoff that would threaten the Treasury’s borrowing authority and credit rating.
“I made it very clear after the November election that we certainly are not going to shut down the government or default on the national debt,” McConnell said. “We’ll figure some way to handle that and hopefully it might carry some other important legislation that we can agree on in connection with it.”
McConnell appeared sanguine about resolving the thorny problem despite the latest battle between the White House and congressional Republicans that almost led to a partial shutdown of the Department of Homeland Security.
More than 50 House Republican conservatives voted against the final version of the $40 billion DHS spending bill because it didn’t include language blocking Obama’s executive orders protecting millions of illegal immigrants from deportation.
House Speaker John Boehner (R-OH) has shown repeatedly he can’t keep scores of conservative members in line. The looming fights this fall over new spending levels and the debt ceiling are certain to create new fissures within the GOP majority on Capitol Hill. Obama prevailed last year in extracting a deal on the debt ceiling that didn’t require him to make any major policy concessions, and he is likely to take that same stand again this year. Still, McConnell insisted there was cause for optimism.
“When the American people elect divided government, they’re not saying they don’t want anything done,” the majority leader said, once again asserting there is room for compromise between the new Republican majority Congress and Obama. “They are saying we want you guys on each side to look for things that you can agree on to make progress for the country, and that’s always my first choice.”
In announcing that the government is once again bumping up against the debt ceiling, Lew said in a letter that his office would be forced to begin utilizing a number of budgetary and financial tricks to avoid breaching the Treasury’s current borrowing authority.
The Treasury has used these extraordinary measures in the past to buy time before the government is literally in default. The first step involves suspending the issuance of State and Local Government Series securities on March 13. SLGS are special-purpose Treasury securities issued to states and municipalities to assist them in conforming to certain tax rules. When Treasury issues SLGS, they count against the debt limit.
The debt ceiling has been raised five times during the Obama administration, fewer than George W. Bush and Bill Clinton his immediate predecessors have.
The Treasury secretary emphasized, "Increasing the debt limit does not authorize new spending commitments," but instead "simply allows the government to pay for expenditures Congress has already approved."
The CBO said last week that if Congress does not raise the federal debt limit, the Treasury Department would exhaust all of its borrowing capacity and run out of cash in October or November, slightly later than a previous forecast.
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