Committee for a Responsible Federal Budget

CBO and BPC Predict Debt Ceiling Deadline Not Until the Fall

October or November -- that's the deadline by which the nonpartisan Congressional Budget Office (CBO) predicts lawmakers must increase the debt ceiling to avoid default. The Bipartisan Policy Center, which uses its own debt limit projection model, also predicts that without action the debt limit will be reached sometime between October and December.

The federal debt limit, which was suspended in February 2014, is set to be reinstated on March 16, the second of many Fiscal Speed Bumps that this Congress will face this year. As of that date, the Treasury will have to take “extraordinary measures” (essentially accounting manuevers, which CBO points out have become rather commonplace) to keep the government functioning without hitting the limit. CBO estimates that these measures will allow the Treasury to keep paying all of its bills until October or November, although that date is uncertain. At that point, the government would begin defaulting on its obligations and would only be able to finance government outlays with incoming revenue and whatever cash it had on hand. With the federal government still running a sizable deficit, this amount would be insufficient to pay all the nation's bills.

 

Click here to learn more about the debt ceiling.