As you may recall, the “deal” that ended the government shutdown last month extended federal appropriations until mid-January, and the debt limit until February 8. Democrats also managed to bat down Republican efforts to hamstring the Treasury’s ability to stretch the debt limit via the “extraordinary means” it has now deployed twice in the last three years.
So when could we theoretically be back into debt default threat territory if the budget fight becomes toxic and GOPers again link it to the debt limit, or if the popular Tea Party idea that the debt limit should never be increased catches fire? According to a new estimate from the Congressional Budget Office (via Brad Plumer), Treasury would likely thrown in the towel at some point between March and June:
If the current suspension is not extended or if a higher debt limit is not specified in law before February 8, 2014, beginning on that date the Treasury will have no room to borrow under standard operating procedures. Therefore, to avoid a breach of the ceiling, the Treasury would begin employing its well-established toolbox of so-called extraordinary measures to allow continued borrowing for a limited time.
CBO projects that those measures would probably be exhausted in March. However, the timing and magnitude of tax refunds and receipts in February, March, and April could shift that date of exhaustion into May or June.
It’s a little early to tell whether we should be worried about this, given the pressure GOP Members of Congress were clearly feeling in October; I strongly suspect the usual public support for debt defaults, based on the faulty premise that they simply stop future spending, has now weakened considerably, and will be reflected in the polls next time the subject is in the headlines. But in light of recent experience, it would probably be a good thing if the spending and debt deadlines were separated in time as much as is possible. Some of our conservative friends just can’t resist the temptation of a engineering a really big train wreck.