Effective Friday, February 7, the Treasury will no longer have the authority to issue bonds to pay the federal government's debts. Within weeks, the cash on hand could run out, and it is conceivable that the federal government could begin to default on some of these debts unless Congress acts to raise the debt ceiling and grant Treasury borrowing authority, again. However, as we have seen before at times when the debt ceiling has loomed, Congress has a longstanding history of concocting the most complicated path to the inevitable outcome: raising the debt limit.
Unlike the previous three (!) debt ceiling standoffs of recent years, brinksmanship and bravado have not been the focus of the latest effort. Where in the past, partisans on each side have dug in their heels and made bold statements about what concessions they will demand for their support in raising the debt limit, it appears that the leadership on both sides are looking for the path of least resistance to get a deal done.
House Speaker John Boehner (R-OH) said at a news conference, "I think that we're still looking for the pieces to this puzzle. But look we do not want to default on our debt, and we're not going to default on our debt. We're in discussions with members about how we can move ahead."
Treasury Secretary Jack Lew has stated, "the bottom line is: Time is short. Congress needs to act to extend the borrowing authority for our nation, and it needs to act now." The Secretary has explained that while, in the past, Treasury has been able to use, "extraordinary measures" to keep paying bills for months after hitting the debt ceiling, this time, due to the timing of the current deadline, these extraordinary measures will only give Treasury flexibility through the end of February.
Given the timeline laid out by Treasury, as well as the general tone in Congress, there is a growing consensus that a deal can and will be reached in the coming weeks, which would eliminate a major hurdle as lawmakers and the administration begin preparations for Fiscal Year 2015. The administration previously announced that the President would release his FY 2015 Budget on March 4. This timeline has since been updated. The White House now plans to release its Fiscal 2015 budget proposal in two installments. The first installment, a topline spending proposal, will be released on March 4. The second installment, a much more detailed document including the Budget Appendix and the justifications behind the numbers, will be released on March 11.
With the Murray-Ryan Budget Agreement settling the top line numbers for two years (FY 2014 and FY 2015), it is not clear what influence the President's Budget will have on congressional action on the budget this year. Rumor has it that the Senate Majority Leader Harry Reid (D-NV) has already decided that the Senate will not be considering a Fiscal Year 2015 Budget Resolution since the December Budget agreement already determined the overall budget numbers. The bottom line: between the prospect of reaching a clean agreement on the debt ceiling and rallying together around a two-year budget agreement, the President's budget submission is more about meeting the statutory requirements in the Congressional Budget Act than breaking new ground on guidance for the sure-to-be productive election year Congress.
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