Line Items: Debt Ceiling Edition

Taking It to the Limit – The statutory debt ceiling is back. The temporary suspension of the debt limit enacted earlier this year was lifted on May 19. The Treasury Department has begun extraordinary measures to hold off a default. Treasury Secretary Jacob Lew says the measures should last until after Labor Day, though he urged quick action. The Hill notes these so-called "extraordinary measures" have become commonplace in recent years as the debt limit has become a political hot potato. The latest deadline sparked little action from policymakers as budget talks remain stalled. Waiting until another debt ceiling crisis is directly in front of us is not a good idea. Standard & Poor’s, the credit rating agency that downgraded the U.S. credit rating after the last debt limit fight, warns that another such episode could result in another downgrade. Our leaders should be working now on a comprehensive plan that would make raising the debt limit more palatable. Keep track of debt limit developments here and get familiarized with the debt ceiling with our primer.

Sequester Replacement Bill Introduced – House Democrats on Monday introduced legislation to replace sequestration for two years with a package of roughly equal spending cuts and revenue increases. This is a positive step towards replacing the sequester, although we would prefer a comprehensive plan that addresses the long-term drivers of the debt. Learn more about sequestration with our Sequestration Resource Page.

Appropriations Process Moves Forward – Even without a concurrent budget resolution Congress is moving forward with spending bills for the fiscal year beginning October 1. Predictably, the House and Senate are far apart. The Senate is using topline spending numbers $91 billion higher than the House because the Senate does not include the sequestration cuts. The House assumes the sequester is maintained but includes defense and security spending beyond the caps, making up for the increase with further cuts to domestic spending such as education. The House Appropriations Committee approved of the Military Construction and Veterans Affairs spending bill on Tuesday.

CBO Scores President’s Budget – On Friday the Congressional Budget Office (CBO) released its score of the President’s fiscal year 2014 budget. CBO says the budget will reduce deficits by $1.1 trillion over ten years relative to its baseline. The score confirms that the budget is a step in the right direction in putting the debt on a downward path as a share of the economy. But CRFB noted in a statement that more would be needed to be done to ensure adequate long-term debt reduction. Read our full analysis here.

Confirmation Hearing for OMB Deputy – The Senate Budget Committee held a confirmation hearing on Tuesday for the designee to be Deputy Director of the Office of Management and Budget (OMB), Brian Deese. In his testimony, Deese mentioned his commitment to crafting a sound fiscal policy. “Much of my professional work has focused on the role that fiscal policy can play in promoting stronger and more durable economic growth. I believe that sound fiscal policy requires all of us to not shy away from our long-term fiscal challenges and to work diligently to reduce our deficits to strengthen the economy for both current and future generations. If confirmed, I will work closely with Director Burwell to build on the progress we have made and to help find common ground on the kind of comprehensive deficit reduction plan that will achieve these vital objectives.”

Hearings Expose Need for Tax Reform – High-profile congressional hearings on the IRS scandal over tax-exempt 501(c)4 organizations and efforts by Apple Inc. to lower its tax burden have spotlighted the need for tax reform. Bipartisan, bicameral efforts to fundamentally reform the tax code continue. Try your hand at corporate tax reform with our interactive calculator.

Key Upcoming Dates (all times are ET)

May 22

• Joint Economic Committee hearing on "The Economic Outlook" with Federal Reserve Chair Ben Bernanke at 10 am.
• Senate Budget Committee hearing on "Supporting Broad-Based Economic Growth and Fiscal Responsibility through Tax Reform at 2:30 pm.

May 23

• House Committee on Ways and Means Social Security Subcommittee hearing on the President's and other bipartisan entitlement reform proposals at 9:30 am.

May 30

• Bureau of Economic Analysis releases second estimate of 2013 1st quarter GDP.

June 7

• Bureau of Labor Statistics releases May 2013 employment data.

June 15

• Deadline for estimated quarterly individual and corporate tax payments.

June 18

• Dept. of Labor's Bureau of Labor Statistics releases May 2013 Consumer Price Index data.

June 26

• Bureau of Economic Analysis releases third estimate of 2013 1st quarter GDP.

June 28

• The date Treasury Department expects a nearly $60 billion payment from Fannie Mae, which will help delay the time by which lawmakers will need to raise the debt ceiling.

July 5

• Bureau of Labor Statistics releases June 2013 employment data.

July 16

• Dept. of Labor's Bureau of Labor Statistics releases June 2013 Consumer Price Index data.

July 31

• Bureau of Economic Analysis releases advance estimate of 2013 2nd quarter GDP.