Analysis: House bill will lead to $450 billion increase in debt limit

The House Republican plan to suspend the debt limit until May 19 will eventually result in an increase to the nation's borrowing limit of about $450 billion, according to new analysis.

The Bipartisan Policy Center, which closely tracks the nation's debt limit, also said Wednesday that under the legislation, the nation would next need to raise the debt limit by the end of July at the earliest.

A House Republican proposal to suspend the debt limit until May 19 and then automatically raise it to cover federal borrowing during that time was approved Wednesday in a bipartisan vote of 285-144.

According to the center, that suspension and eventual hike would likely amount to $450 billion, assuming the bill is enacted by the end of January. Senate Democrats have said they would bring up the measure following House passage, and the White House has said it does not oppose the bill.

However, if the bill is somehow delayed and not passed until later, the center warned that the Treasury Department will have less time going forward to avoid a possible default.

Whenever the government reaches its borrowing limit, the Treasury employs what it calls "extraordinary measures" to free up funds to keep the government paying its bills. The government reached its borrowing limit on Dec. 31 and will be able to avoid default until mid-February or early March, according to Treasury Secretary Timothy Geithner.

But the longer Congress spends on the bill, the more those measures will be exhausted and the longer they will take to replenish while the debt limit is suspended. As a result, the center said the sooner the bill is passed, the longer the Treasury will be able to avoid a default the next time it reaches its borrowing cap.

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