Here Comes Debt Limit February

posted at 4:11 pm on January 30, 2014 by Kevin Glass

The debt limit was “suspended” in the last debt limit deal struck by Congress and the President on October 17th, and will come back on February 8th – at which point we’ll be basically at the debt limit. The Treasury Department will then resort to “extraordinary measures” that they’ve used to delay debt-day in the past. February is a month in which the federal government typically spends a lot and doesn’t take in a whole lot of tax revenue, so those “extraordinary measures” likely won’t last as long as they have previously.

The Bipartisan Policy Center has put out their most recent estimation of what they call the “X Date” for the debt limit, and estimate that it will hit as early as February 28th or as late as March 25th. That leaves the federal government with, at minimum, a month to deal with the impending limit.

The BPC report also finds that a March Treasury auction might increase the costs of debt servicing, which would accelerate the X Date:

BPC now projects that the X Date will likely occur between February 28 and March 25. However, even under a very optimistic scenario, the government would be less than $5 billion away from the X Date on March 14. To put this in perspective, one day’s spending in March would typically be more than $10 billion. As such, there is a high probability that the X Date could occur on or in the days before March 14. If Treasury is able to get past Friday, March 14 without exhausting cash-on-hand, receipt of corporate income taxes due on Monday, March 17 could buy another week or so. But a scenario in which the X-Date occurs after March is extremely unlikely.

As of late January, Treasury is scheduled to roll-over about $250 billion of maturing securities in the month of March, and this amount will increase as Treasury schedules additional short-term auctions in the days ahead. As the X Date approaches without action on the debt limit, one risk is that buyers of government debt will be less likely to participate in Treasury auctions and, for those that continue to participate, more likely to demand higher interest rates, increasing the cost of servicing the existing debt.

Politico reported this week that Republicans are likely to cave on the debt limit with either minimal concessions or just a straight up clean debt limit hike. Politico quoted Rep. Raul Labrador (R-Idaho) as saying that since they finished the Patty Murray-Paul Ryan budget, they “knew that you were going to get a clean debt ceiling.”

Treasury Secretary Jack Lew told lawmakers last week that he estimated we’d hit the hard debt ceiling in February rather than in March.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

Hey that’s our money Jack!

tim c on January 30, 2014 at 4:12 PM

Having an outright Marxist as Treasury secretary is pretty awesome.

Murphy9 on January 30, 2014 at 4:13 PM

Ruling by crisis is getting old.

Fallon on January 30, 2014 at 4:14 PM

Scary thought – the quo part of this is full legalization of the illegal aliens.

Steve Eggleston on January 30, 2014 at 4:17 PM

as saying that since they finished the Patty Murray-Paul Ryan budget, they “knew that you were going to get a clean debt ceiling.”

Well good for you!

And just as soon as the Paul Ryan-Maxine Waters immigration bill gets finished we can get a clean amnesty deal.

Bishop on January 30, 2014 at 4:20 PM

And just as soon as the Paul Ryan-Maxine Waters immigration bill gets finished we can get a clean amnesty deal.

Bishop on January 30, 2014 at 4:20 PM

It won’t be completely clean – those found to be from Communist countries will be deported.

Steve Eggleston on January 30, 2014 at 4:23 PM

…so those “extraordinary measures” likely won’t last as long as they have previously.

If you think about it that is actually the story of Obama’s life.

DanMan on January 30, 2014 at 4:24 PM

It’s not even a debt speed bump anymore.

Flange on January 30, 2014 at 4:26 PM

Immigration reform, “debt ceiling” limit, . . . . . what else can the Republicans cave-in on ?

listens2glenn on January 30, 2014 at 4:33 PM

Hey GOPe shills, is this the hill to die on? Or does this threaten the midterms? I lost count of how many hills we gave up on.

nobar on January 30, 2014 at 4:34 PM

Do I here the patter of RINO hoofbeats approaching?

philw1776 on January 30, 2014 at 4:40 PM

It’s not even a debt speed bump anymore.

Flange on January 30, 2014 at 4:26 PM

As we push well on the path to doubling the size of the national debt between January 2009 and January 2017, the number has gotten to the point that none of the politicians really consider it real – which is why it’s no longer seen as a limit / speed bump anymore.

It’s something that impacts tomorrow – not today, and for the politicians, the only part of tomorrow that counts is the next election.

Neither party has the will to change our trajectory – so they are following France / Greece and hoping for a different result.

Athos on January 30, 2014 at 4:40 PM

Athos on January 30, 2014 at 4:40 PM

Kick the Can was a fun game as a kid, not so impressive as an adult.

Flange on January 30, 2014 at 4:46 PM

By the way, who is this Kevin Glass who’s byline is on the story? I know Steve Eggleston posts occasional economic posts, but Glass? Who is he?

Vanceone on January 30, 2014 at 4:49 PM

I lost count of how many hills we gave up on.

all of them nobar

DanMan on January 30, 2014 at 4:52 PM

By the way, who is this Kevin Glass who’s byline is on the story? I know Steve Eggleston posts occasional economic posts, but Glass? Who is he?

Vanceone on January 30, 2014 at 4:49 PM

Managing editor of Townhall. I like his stuff.

Steve Eggleston on January 30, 2014 at 4:53 PM

GOP/DNC: The only cure for a mountain of unpayable debt…is more debt. Anyone suggesting otherwise is CRAZY. The science is settled.

kpguru on January 30, 2014 at 5:05 PM

Wouldn’t responsible governance be reflected by ever growing cash on hand?

Murphy9 on January 30, 2014 at 5:07 PM

GOP/DNC: The only cure for a mountain of unpayable debt…is more debt. Anyone suggesting otherwise is CRAZY. The science is settled.

kpguru on January 30, 2014 at 5:05 PM

Comment of the Day™

Steve Eggleston on January 30, 2014 at 5:07 PM

Do I here the patter of RINO hoofbeats approaching?

philw1776 on January 30, 2014 at 4:40 PM

No, retreating.

PersonFromPorlock on January 30, 2014 at 5:08 PM

That damn Tea Party and their holier than though financial responsibility mantra.

Bitcoin is coming.

Connecticut on January 30, 2014 at 5:21 PM

What’s the big deal. If we’re in danger of default then the Treasury Secretary can just threaten the ratings agencies and bond holders.

It’s the Chicago Obama way.

gwelf on January 30, 2014 at 5:49 PM

This is like American Express giving you an increase on the card. If you don’t stop using the card, it’s not going to last long. You can’t give this President, or the Democrats this kind of money and not expect them to waste it.

I’d love to be able to say that, if the Republicans take over this will stop, but I can’t. I remember the Bush years and these people will be more than happy to “slow the rate of growth”.

bflat879 on January 30, 2014 at 6:20 PM

2014, the year of regret. Book it.

EA_MAN on January 30, 2014 at 9:04 PM

However bad this debt deal becomes, one part of it must be exposed.

The debt ceiling increase MUST contain an actual AMOUNT!

This game of hiding behind a date, and then never announcing how much the increase was, is a SICK TWISTED concept that can only be embraced by the WORST POLITICIANS!

Freddy on January 30, 2014 at 9:07 PM