POLITICO Pro CBO: Debt limit will have to be increased by October or November

Ready for the next budget crisis?

Just as lawmakers were breaking an impasse over homeland security funding, the Congressional Budget Office warned on Tuesday that a much bigger challenge looms: raising the debt limit.


Lawmakers will have to lift the legal cap on government borrowing in October and November, the nonpartisan agency said. The Treasury Department will have to begin using its bag of accounting maneuvers known as the “extraordinary measures” to stave off default by the middle of this month.

Republicans have no clue what, if anything, they will demand in exchange for raising the debt cap.

“These conversations are really in their nascent stage,” said House Budget Committee Chairman Tom Price (R-Ga.), who said he prefers returning to the so-called Boehner rule, requiring spending cuts at least equal in size to any increase in the debt ceiling. “I don’t know what we will ultimately decide.”

It will be the first debt hike to face Republicans since they took full control of Congress. Debt increases have been among the toughest votes for House Republicans, and they’ve only had mixed success extracting concessions from Democrats.

The automatic budget cuts known as sequestration that continue to hit federal agencies are a legacy of a 2011 debt limit deal. But in the wake of a 2013 budget fight that resulted in a hugely unpopular government shutdown, a chastened GOP allowed a “clean” debt increase to pass without any conditions.

The most recent increase, approved in February 2014, suspended the debt cap through March 15, 2015. After that, the ceiling will snap back into place, forcing Treasury to shuffle money among various programs to prevent default.

It will run out of those accounting tricks, and cash, by October or November, CBO said, though the exact timing is uncertain.

But there is more fiscal drama even before the next debt limit hits.

They must first deal with steep cuts in Medicare payments to doctors set to hit at the end of March, and a gaping budget hole in the highway trust fund that will demand attention in the spring.

“Those are deadlines before that deadline,” said Rep. Pat Tiberi (R-Ohio), who sits on the Ways and Means Committee. “We’re dealing with what is in front of us.”

It’s a reminder that, after a lull in Washington’s budget wars, a string of fiscal cliffs threaten to soak up much of Congress’ time and energy, leaving little space for more ambitious projects like reforming the tax code.

Republicans don’t yet know how they’ll address the Medicare payment issue, let along the highway program or the debt limit, said Tiberi.

“Yet to be determined,” he said.

The debt now stands at $18.1 trillion, CBO said, about twice the level seen at the end of 2007.

Republicans got one of the funding cliffs out of the way earlier on Tuesday, when the House voted 257-167 to approve a Department of Homeland Security budget bill without the restrictions on President Barack Obama’s immigrations policies that some conservatives had sought.