Debt Limit: It's Baaaaaaaaaaaaack!
On June 11, the Congressional Budget Office released its estimate on when the United States will officially hit the debt ceiling — an event that will no doubt provoke another maelstrom of gridlock and bickering on Capitol Hill.
Since provisions of the No Budget, No Pay Act of 2013 (HR 325) took effect in May, the federal debt limit has been suspended at exactly $16,699,421,095,673.60. Default on the debt has been held in check by Treasury’s full arsenal of extraordinary measures, but the CBO estimates the measures will be exhausted by fall of this year, either in October or November.
Beneath the vagueness of the term “extraordinary measures” is a series of shuffled investments and suspended securities issuances intended to constrain debt held, making room for additional borrowing. Little-known programs such as the Thrift Savings Plan G Fund, Exchange Stabilization Fund, State and Local Government Series securities, Civil Service Retirement and Disability Fund, and Postal Service Retiree Health Benefits Fund are those directly affected by this “debt issuance suspension period.”
Pushing us closer towards the ceiling are the daily cash flows of the federal government and debt issuance by the Treasury through scheduled interest payments and debt auctioning. Expenditures to Medicare, Social Security, benefits for active duty military and veterans, and interest payments — offset by tax revenues collected from individuals and corporations — are the primary drivers of cash flows. The precise date the debt limit is reached depends entirely on how long the Treasury’s extraordinary measures can stave off the uncertain magnitude of these cash flows and key debt transactions in the coming months.
Speaking to the unpredictable timing of this year’s debt ceiling breach, a credible think tank previously estimated it would occur in September or October. However, with the help of an unexpectedly high dividend payment from the government-sponsored enterprise, Fannie Mae, the Treasury is expected to survive on its extraordinary measures for an extra month.
Meanwhile, policymakers on both sides of the aisle have already begun to dig their rhetorical trenches in anticipation of the showdown. The Obama administration, with the support of senior Democrats in Congress, has repeatedly called for a “clean” increase of the debt limit without spending cuts and policy overhauls. Firmly stating that any increase of the debt limit must be offset by cuts in spending, Speaker John Boehner has suggested hotly contested entitlement reform as a means to achieve long-term reductions.
Regardless of who may ultimately win the ensuing battle, concerned millennials can only hope for a solution to America’s ever-ballooning debt that is as genuine as it is substantial. After all, there is too much at stake to allow the can to be kicked down the road once again.
James McKitrick is a politically active conservative devoted to addressing America's massive national debt together with its impact on millennials now and in the coming years.
This article was originally published by The Can Kicks Back, a non-partisan and Millennial-driven campaign to defeat the national debt and reclaim our American Dream.