Congress could have until as late as mid-October to haggle over raising the debt limit, according to new expert analysis.
The Bipartisan Policy Center (BPC), which has been closely tracking the flow of the nation's finances as policymakers prepare to spar over its $16.4 trillion borrowing cap, now believes the government could avoid a default on its obligations as late as mid-October once its borrowing cap is reinstated in May.
In January, the BPC said it believed Washington would have to hike the limit to avoid default most likely in August, but there was a "realistic chance" it could be later. Now, with fresh information about the nation's fiscal picture, the BPC believes the deadline for a debt-limit deal will be roughly a month later, and possibly more.
BPC estimates that the limit will be roughly $250 billion higher once the suspension expires, bringing it to somewhere between $16.6 and $16.7 trillion.
At that point, the Treasury Department will begin employing "extraordinary measures" to free up funds to ensure the government stays up to date on its obligations when it runs out of room under its borrowing cap.
Passage in March of a continuing resolution to keep the government funded through the end of the fiscal year, as well as updated information on the nation's revenues and spending, have painted a slightly clearer picture for BPC analysts.
They caution, however, that there is still "substantial uncertainty" in the debt-limit timeline. The BPC believes the debt-limit deadline could come anytime between mid-August and mid-October.
Furthermore, the group notes that the Treasury will have a "close call" at the beginning of September that could make a hike to the debt limit necessary. While the BPC believes the government will run a surplus in that month, several large payments are due in the first three days, including Social Security, Medicare and veterans' benefits.
If the economy or the deficit were to get worse than expected, the government might need a boost in its borrowing limit to make those September payments on time. However, if the Treasury can clear those payments without needing that boost, it looks like the debt limit would not need to be raised until sometime in October, the BPC said.