The importance of Treasury Secretary Jack Lew’s letter to Congress yesterday on the breaching of the debt limit is that it moves up the anticipated date significantly, notes the Wall Street Journal‘s Damian Paletta:
Before Monday, the Treasury had said the debt-ceiling deadline would occur sometime after Labor Day, and some outside analysts had forecast it might not come until November. The new mid-October deadline falls just two weeks after Congress and the White House must reach a separate agreement over how to fund government operations beyond Sept. 30, the end of the federal fiscal year. Failure to do so would trigger a partial government shutdown.
With the debt limit “crisis” having steadily drifted to later points on the calendar for many months now, pols have gotten into the habit of thinking of it as a distant storm that never quite arrives. Well, it looks like it’s arriving fast, and so fast that the assumption of separate appropriations and debt limit “fights”–or opportunities for a fight–is collapsing. As Kevin Drum put it:
Politically, this means that Republicans don’t really have the option of quickly passing a 2014 budget (or a short-term continuing resolution) and then taking some time off to plan for their latest round of debt ceiling hostage-taking at the end of the year. If mid-October really is the drop-dead date, it means that budget negotiations in late September and debt ceiling negotiations in early October pretty much run right into each other. It’s Fiscal Cliff v2.0.
As you may recall, however, the president has repeatedly said that he won’t negotiate over the debt limit–a position Lew reiterated just today. So something’s gotta give pretty soon. The can cannot be kicked down the road much longer.