Lawmakers will need to strike a debt limit deal by October or November to avoid a catastrophic default, according to the Congressional Budget Office.
Just minutes after lawmakers averted a partial government shutdown by agreeing to fund the Department of Homeland Security, the CBO released a warning about the need to lift the debt ceiling.
{mosads}In a new report, the CBO estimated that the government would default on its obligations some time in October or November if Congress fails to act.
The nation’s borrowing cap is currently suspended until March 16. At that point, the ceiling will be automatically increased to cover all government borrowing since the limit was suspended in February 2014.
Treasury will then need to deploy its “extraordinary measures” to keep the government operating.
Those maneuvers to free up funds beneath the borrowing cap can buy several months for congressional debate, but is heavily dependent on the flow of funds into and out of the federal government.
In identifying a fall deadline, the CBO warned that this preliminary estimate could swing significantly in either direction. Outside analysts have estimated the debt limit deadline could come some time in the late summer or early fall.
If the deadline stays in the fall, the debt limit fight could overlap with the debate over funding the U.S. government, as federal funding expires Sept. 30.
When the limit returns, the nation’s total debt will stand at around $18.1 trillion, roughly twice the nation’s debt burden just eight years ago.
The debate over the borrowing cap will mark a significant battle in Washington, with the White House facing off against Republicans now in control of both chambers of Congress.
The administration has enjoyed the upper hand in previous battles, as lawmakers agreed to hike the limit last February without conditions Republicans previously demanded. The question now is what, if anything, Republicans will seek in exchange for another borrowing boost.
Legislation addressing the limit only passed after a prolonged Senate vote, in which several GOP leaders had to throw their support behind the measure to guarantee its passage. Most Republicans in the House opposed the suspension, but a coalition of Democrats and some GOP lawmakers agreed to the measure.