Debt-limit fight could be delayed to 2018

Debt-limit fight could be delayed to 2018
© Greg Nash

President Trump and Congress may not have to raise the debt ceiling in December — despite the controversial deal reached between the White House and Democrats this week to raise the debt limit through Dec. 8

That deal also funds the government through Dec. 8, setting up a pair of new deadlines just before the holidays.


Yet the Treasury Department could then use extraordinary measures to keep paying the government’s bills, putting off the need to raise the debt ceiling for a matter of weeks or even months, depending on expenditures and receipts.

That could have implications for both parties in December, though it is difficult to know just how the dynamics could play out. 

The debt-ceiling deal gives Democrats leverage in negotiations with Trump.

The president will need votes from the minority to raise the debt limit, and does not want to fail to lift the borrowing limit, which could lead to a default. Doing so could cause markets to drop and hamper the economy, a strength and point of pride for the president.

But if Congress does not have to deal with the debt ceiling at the same time as it works to prevent a shutdown, it’s possible that Trump won’t need to worry about the debt ceiling before Christmas — leaving Democrats with a bit less leverage in the pre-holiday talks. 

Trump is also talking about a deal that could do away with future debt-ceiling votes by Congress, something Democrats have signaled they’re open to considering. Speaker Paul RyanPaul Davis RyanIndiana GOP Rep. Brooks says she won't seek reelection Indiana GOP Rep. Brooks says she won't seek reelection Inside Biden's preparations for first debate MORE (R-Wis.) said Thursday he’d oppose such a change.

It’s unclear how long the Treasury Department’s measures could put off a debt-ceiling vote.

It was able to use its accounting tricks to push this month’s debt vote off for six months, but there’s no clear estimate for the next go-around.

“Treasury’s cash flow and borrowing needs are very lumpy, rising and falling throughout the year,” said a spokesman for the Committee for a Responsible Federal Budget.

The Treasury Department stretches its finances based on tax receipts and spending outlays. Early months of the year tend to be high-deficit months, meaning the Treasury will have to spend more than it is taking in.

In March, a wave of corporate tax receipts flow in, followed by income taxes in April. 

All those calculations could change further depending on whether Congress approves changes to the tax code, if the government shuts down, how much is spent on disaster relief and many other factors.

It’s also possible, and perhaps likely, that Trump and Republicans will want to keep the debt ceiling paired with the government funding deal.

The alternative is setting up another deadline and giving Democrats leverage at that time.

With or without a debt-limit deadline, Democrats know they’ll have the threat of a government shutdown in December. And both parties generally believe Republicans would get the blame.