Congress has about six weeks to raise the debt ceiling, a faster-than-expected timeline attributable to the new tax law, according to the Congressional Budget Office (CBO).
If the debt limit is not raised by the first half of March, “the government would be unable to pay its obligations fully, and it would delay making payments for its activities, default on its debt obligations, or both,” CBO said.
The debt ceiling had been suspended until Dec. 8, 2017, and the Treasury Department has taken emergency measures since then to keep the government from falling behind on payments. The government ran a budget deficit of $666 billion in 2017, forcing Treasury to cover the balance by borrowing money. Treasury’s borrowing authority is set by Congress, and the current limit is more than $20 trillion.
CBO had previously projected that Treasury would run out of cash sometime in early April but the $1.5 trillion in tax cuts enacted by Congress late last year changed the agency’s calculations.
“After incorporating the anticipated effects of recent tax legislation and actual spending and revenue amounts in December into its calculations, CBO now projects the range of possible dates as falling earlier in March,” CBO said.
Congressional Democrats seized on the news as evidence of Republicans’ contempt for fiscal responsibility. “Far from paying for itself, as Republicans promised, the GOP’s fevered push to pad the pockets of corporations and the wealthiest one percent is exploding the deficit,” said House Minority Leader Nancy Pelosi (D-CA).
Congressional Republicans are at a retreat in West Virginia today to discuss ways to tout the GOP tax overhaul to voters in advance of the midterm elections and hammer out a legislative agenda for the rest of 2018. Republican leaders also want to build support for a $1.5 trillion infrastructure plan, which could be a tough sell to fiscal hawks in their party who want to see less debt. Those same conservatives are also reluctant to support another debt ceiling increase without budgetary reforms.