With Fannie Mae now planning to pay the U.S. Department
of the Treasury an additional $10.2 billion in September, it appears that the
federal debt ceiling debate could be further delayed. While the timing remains
uncertain, at some point Congress and the White House will need to raise the
nation’s borrowing limit to avoid a debt default or credit rating downgrade.
Earlier this year, the borrowing deadline was pushed back
several months due to the flood of revenue from the mortgage companies. Fannie
Mae paid the government nearly $60 billion in June, and this new $10.2 billion
will join the $4.4 billion from Freddie Mac. These operations have become a significant
source of funds for the U.S. Treasury.
In addition to increased payments from Fannie and
Freddie, federal revenue has been rising while government spending has slowed.
According to the Congressional Budget Office, the federal deficit fell by more
than a third in the first 10 months of this fiscal year, assisted mostly by a
14 percent increase in tax revenue, along with a small decline in spending. The
federal government spent $606 billion more than it took in, a drop of $368
billion, or 37.8 percent, over the same period last year. Spending, reduced by
sequestration, fell by 3 percent, or $90 billion, to $2.9 trillion.
Another delay could further complicate negotiations over
a year-end spending bill (for FY2014), which some Members of Congress have been
hoping to link to a debt ceiling increase. Negotiations over the debt ceiling
have also been seen as the trigger point for a larger budget deal.