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May 03
​Debt Ceiling Debate Could be Delayed until Fall

When lawmakers return to Washington, D.C. on Monday after their week-long recess, the U.S. Senate is expected to take up the Marketplace Fairness Act, while the House will debate several smaller pieces of legislation—all in lead-up to the expiration of the suspension of the debt ceiling (the suspension expires May 18).

The U.S. Treasury Department has announced that it will once again undertake “extraordinary measures” to provide additional headroom to avoid default—or breaching the current debt limit. Wall Street projections show that these extraordinary measures will delay such a default until September, but Treasury has declined to announce a drop-dead date. In any case, Congress must act to raise or waive the debt ceiling or risk a default on outstanding obligations once all of the extraordinary measures are finally exhausted in late summer or fall.

The default date is considered a critical deadline because lawmakers have been looking to the potential threat of default as a major driver for negotiations on budget disputes in Congress. If potential default is delayed until after Congress’ August recess, it makes it more likely that lawmakers will negotiate fiscal 2014 spending and raising the debt limit at the same time. Earlier this year, it looked as if Congress would have to deal with the debt limit before the August recess and with spending bills in September.

Regardless of when the debt ceiling is reached, Congressional debate will continue over whether or not the debt limit increase will move forward as part of a clean package or whether it will be attached to further budget cuts. A new twist was added recently when the House Ways and Means Committee approved H.R. 807, the Full Faith and Credit Act, which would allow new borrowing above the debt ceiling to pay interest on the debt and interest due the Social Security trust fund. The measure is expected to be considered on the House floor the week of May 6, but it is unlikely that the Senate will take it up. 

Contact: Marilina Sanz 202.942.4260 


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