With the debt ceiling having been reinstated last Friday, lawmakers are scrambling to come up with legislation to lift or suspend it again before extraordinary measures likely run out by the end of the month. Originally, House Republicans had planned on attaching a repeal of the military retirement cost-of-living adjustment reduction for people who joined the service prior to 2014 to a debt ceiling suspension through March 15 of next year.
In order to avoid bumping up against the statutory debt ceiling, the Department of the Treasury has begun undertaking a number of so-called "extraordinary measures." The current debt limit is $17.211 trillion.
Yesterday, we updated our Q&A: Everything You Needed To Know About the Debt Ceiling to reflect the newest date for the debt ceiling, which will be reinstated after February 7. The debt ceiling was suspended in mid-October, following a partial government shutdown, and will be reinstated on Friday. This suspension will result in a de facto $600 billion increase, putting the new debt ceiling at approximately $17.3 trillion.
When Congress ended the government shutdown last October, they also suspended the debt ceiling through February 7th, which is now only a week away. After that date, the debt limit will be reinstated at about $17.3 trillion, according to estimates from the Bipartisan Policy Center (BPC). After that date, Treasury can still use "extraordinary measures" to continue paying the nation's bills for a limited amount of time.
Given the nature of debt ceiling politics lately, estimating when the federal government will start defaulting on obligations has become a common, multiple-times-a-year occurrence.
With President Obama's signature on Thursday morning, the nation went from the brink of default to having a least a little elbow room on the debt ceiling for a few months. The actual date on which the nation would default (the "X date") is uncertain given the question of whether extraordinary measures will be available, but the bill will at least prevent a breach of the debt ceiling through February 7.
After a few weeks of government shutdown and a nerve-wracking lead-up to hitting the debt ceiling, the Senate leadership announced today it had come to an agreement to resolve the current crisis. Under this deal the government would be funded through January 15 at the FY 2013 level of $986 billion and the debt ceiling would be suspended through February 7 (though extraordinary measures would extend the default date past then). The leaders have also agreed to set up a budget conference committee that would be instructed to report recommendations by December 13.
As the government shutdown continues into its 11th day, the two parties have just begun having serious negotiations about reopening the government and raising the debt limit to prevent a catastrophic default in the next week or so. According to press reports, Senate Republicans are seriously discussing a proposal that would deal with both.
In an op-ed in The Wall Street Journal, House Budget Committee chairman Paul Ryan (R-WI) presents a possible down payment on the debt as a way out of the government shutdown/debt ceiling impasse. The deal would involve entitlement reforms that have some bipartisan support and tax reform.
About the entitlement reforms, he writes: