WASHINGTON — The U.S. government is getting a new borrowing cap today, almost four months after Washington defused October’s government shutdown and debt crisis.
The new cap on borrowing is expected to be about $17.2 trillion. It means Treasury Secretary Jacob Lew will have to employ bookkeeping maneuvers to keep the government functioning until Congress further raises the borrowing limit.
Lew warns he has less maneuvering room now than he had last year, when such “extraordinary measures” bought five months of time for the government to keep borrowing while at the previous $16.7 trillion debt ceiling.
Lawmakers temporarily suspended the borrowing limit last October in the agreement to end the shutdown. It will be reset at the total amount of debt at close of business today.
Treasury’s first step to create borrowing room under the new cap is to temporarily suspend sales of U.S. Treasury securities to state and local governments. That started today at noon.
Lew says Congress must act by the end of the month to avert any possibility of a first-ever, economy-rattling default on U.S. obligations. Raising the limit is needed so that the government, which ran a $680 billion deficit last year, can borrow enough to pay all its bills, including Social Security benefits, interest payments on the accumulated debt and government salaries, among others.
After last year’s 16-day shutdown and accompanying debt battle, Republicans controlling the House are no longer interested in a big fight with President Barack Obama over raising the borrowing cap. Obama knuckled under to GOP demands in 2011 to pair a $2.1 trillion increase in the debt limit with an equal amount in spending cuts, mostly to the Pentagon and domestic agency operating budgets.
But Obama has since refused to negotiate over the debt limit and is insisting that Congress pass a version without GOP add-ons just as Congress gave President George W. Bush several “clean” debt limit increases last decade.
Republicans last year gave Obama two debt increases last year with only modest add-ons, like a provision to force the Senate to pass a budget.
Since GOP leaders like House Speaker John Boehner of Ohio promise to avert a default — but need Democratic votes to pass any increase in the borrowing cap — they may have little choice but to pass a clean measure later this month.