Last week Treasury Secretary Jack Lew told Congress that they project the debt ceiling to be breached in the weeks after February 7th, and that President Obama will not negotiate.
Treasury Secretary Jacob Lew is telling Congress that he will have only a few weeks after Feb. 7 to avoid an unprecedented default on the nation's debt. He says Congress should act quickly next year to raise the borrowing limit.
As part of the agreement that ended the 16-day partial government shutdown in October, Congress suspended the debt limit until Feb. 7.
Some Republicans have said they want to use the approaching deadline to force the administration to make new budget concessions. Lew said the president will not negotiate over raising the debt limit.
The Treasury Department will then be able to use "extraordinary measures" to avoid actually hitting the debt limit, as they have many times before.
The Congressional Budget Office estimated that the debt limit will actually be hit sometime in March, and the Committee for a Responsible Federal Budget broke down how it will actually work:
The actual X date is not February 8 since the Treasury Department can use "extraordinary measures" to temporarily avoid hitting the limit, which CBO predicts will most likely push the X date to sometime in March, but potentially as late as early June or as early as February.
CBO highlights that deficits tend to be very high in February in March as income tax refunds are paid out, but that the government is actually likely to run a surplus in April when tax receipts come due. The latter is the reason why CBO thinks there is a small possiblity that the X date could slip as late as June.
Analysts at the Bipartisan Policy Center, however, do not anticipate this happening. Shai Akabas and Brian Collins of the BPC, who have been very accurate historically, project that the X date will fall between late February and mid-March. A Treasury official also confirmed BPC's estimated timeframe to the Washington Post's Brad Plumer.
We'll see if the GOP has the stomach for another debt limit battle. The debt limit is not like the shutdown - there will be serious repercussions both in financial markets and the global economy if the U.S. government fails to fulfill its obligations. A fight over the debt limit extracted sequestration before, but the last time the GOP got nothing. President Obama is taking the same "no negotiation" stance - and betting the GOP will blink again.
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