Both the House and Senate are out today, but return to the Capitol Tuesday with just two weeks left before the House is scheduled to take its summer recess. The Senate will follow suit in three weeks – unless they too decide to call it good and leave town with the House. In that meantime, leaders must reconcile the differing plans between the chambers for reauthorizing highway and transit funds. And both chambers have hearings slated around the review of the Iran nuclear deal.
But the issue we are watching most closely is the pending debt limit situation. The US Treasury estimates that extraordinary measures to stay financially viable will be exhausted in early December and there is a very good chance that November will be the month in which debt ceiling concerns start to escalate in the markets.
Republicans have begun drawing up their wish list in exchange for raising the debt limit this year. But if they decide to insist on conditions for raising the government’s nearly exhausted borrowing ceiling, they will face strong opposition from Democrats and the White House. And to further complicate the issue, the debt limit debate could get mixed up with whatever deal likely will still need to be reached on FY2016 spending.
The debt limit must be addressed or the government will default on its legal obligations, which the Treasury Department warns would result in a financial crisis.
The last time Republicans forced trade offs for their support to raise the debt ceiling was in 2011 when House Speaker John Boehner (R-OH) drove the successful demand to cut spending dollar-for-dollar for any debt limit increase. The result was the Budget Control Act (PL 112025), which ended up making $2.1 trillion in spending cuts in exchange for a $2.1 trillion debt limit increase. But since then, Congress has suspended the debt limit three times, effectively raising the borrowing ceiling, and the GOP has been unable to force spending cuts in exchange for those increases.
While December seems like a long way off, it will be here before you know it. Raising the debt limit is difficult enough in the current political climate, but having it wrapped around the FY2016 appropriations process and reauthorization of highway and transit programs makes a difficult situation even more challenging.