Think-tank Forecasts US Will Likely Hit Debt Ceiling Sept-Oct
WASHINGTON (MNI) - After the U.S. hits the next debt limit on May 19, the U.S. Treasury will likely be able to continue funding the government using "extraordinary measures" until the middle of August at the earliest, and mid-October at the latest, according to analysis released Friday from the Bipartisan Policy Institute.
The most likely time horizon falls between early September and early October, pushed back from BPI's original projection of August.
February 4, President Barack Obama signed a suspension of the debt ceiling into law, which would result in automatic debt ceiling hikes until May 19. By that time, new legislation will be required before the nation's borrowing authority can be further extended.
The BPC estimates that by May 19 the debt limit will fall between $16.6 and $16.7 trillion, roughly $250 billion above its previous estimate in January.
The study notes that there is "substantial uncertainty" regarding the exact timing of the date due to possible changes in economic conditions in the near-term and the volume of federal payments due in September - Social Security, Medicare Advantage, and a slew of military-related payments.
"If Treasury is able to make these early-month payments in full and on time, it should be able to coast through the rest of September and reach early October before experiencing cash flow problems," the Bipartisan Policy Institute said.
The study notes that the removal of "some policy uncertainty" regarding continuing appropriations as well as additional information about government revenue and spending were the source of the revisions.
--MNI Washington Bureau; tel: +1 202-371-2121; email: kkangarloo@mni-news.com
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