By Zachary A. Goldfarb
Published: April 25, 2013
The next battle over the federal debt limit appears to be further away than many expect — and perhaps not until well into autumn.
Higher tax revenue, lower spending and a potential inflow of money from the recovery of the taxpayer-owned mortgage finance companies Fannie Mae and Freddie Mac mean the government may not have to borrow as much as expected in coming months, analysts say.
And that would mean more time for President Obama and Congress to come up with an agreement to raise the $16.4 trillion debt ceiling.
Earlier this year, Congress agreed to suspend the debt limit through May 18 — and raise it on that date to account for any borrowing done in the meantime. But once the limit is back in place, Congress will have to raise it to accommodate additional borrowing needed to continue funding the government.
The Treasury Department can use several accounting measures to delay the date by which Congress has to raise the debt. Those measures typically buy two to three months of time. The department hasn’t said precisely how much breathing room it expects to gain.
While there has always been a bit of politicking around the debt limit, it has become far more polarized in recent years. In the summer of 2011, Republicans demanded deep spending cuts in exchange for raising the ceiling. Negotiations between GOP leaders and the White House dragged on, bringing the country within a few days of breaching the limit. If that had happened, the Obama administration said, an unprecedented default on the national debt would be imminent.
Republicans agreed to delay the debt limit debate in the fall and haven’t yet indicated what they will do the next time around. Obama has pledged not to negotiate over the ceiling.
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