C’mon, Congress will have to approve a massive increase in the US Statutory Debt Limit. But CNBC has the tantalizing “Doom Porn” headline: “Treasury Dept to invoke ‘extraordinary measures’ as Congress misses debt-ceiling deadline.”
The Treasury Department will begin conducting emergency cash-conservation steps on Monday to avoid busting the federal borrowing limit after a two-year suspension of the debt ceiling expired at the end of July.
Economists say those so-called extraordinary measures will allow Treasury to pay off the government’s bills without floating new debt for two to three months. After that, Congress will need to either raise or suspend the borrowing limit or risk the U.S. defaulting on its obligations.
The limit, a facet of American politics for over a century, prevents the Treasury from issuing new bonds to fund government activities once a certain debt level is reached. That level reached $22 trillion in August 2019 and was suspended until Saturday.
The new debt limit will include Washington’s additional borrowing since summer 2019. The Congressional Budget Office estimated in July that the new cap will likely come in just north of $28.5 trillion.
Currently, there is no statutory limit on the issuance of new federal debt because the Bipartisan Budget Act of 2019 (Public Law 116-37), enacted in August 2019, suspended the limit through July 31, 2021. On August 1, 2021, the debt limit will be reset to the previous ceiling of $22.0 trillion, plus the cumulative borrowing that occurred during the period of suspension.
Given the impending $3.5 trillion infrastructure bill going to The House along with its companion $1.2 trillion infrastructure bill, Congress and the US Treasury needs room to borrow more dollars. And since Democrats control both houses of Congress (although it is 50-50 in the House of Lords (US Senate), VP Harris controls the tie breaking vote), it is almost a sure thing that the debt limit will be increased.
I just wish that Congress would release its bills to The People so we can read it, say one month ahead. But like Nancy Pelosi’s “You’ll have to pass the bill (Obamacare) to see what’s in it” we are likely to be shocked at massive pork projects embedded in the legislation.
The debt ceiling debate is a phony war. There might be some tussling over pork barrel spending, but in the end Congress will gleefully vote to spend ever MORE money that the US doesn’t have.
US Treasury Secretary Janet “Go BIG!” Yellen.