More details on the GOP’s debt-ceiling bill

Washington is quickly coalescing around a plan to avert the debt-ceiling apocalypse—at least for a few months. The House will vote tomorrow on a bill to suspend the debt-ceiling for three months, from now until May 19. The White House is in favor of the idea.

My colleague Suzy Khimm had a nice rundown of the debt-ceiling bill earlier today. Now Donald Marron of the Tax Policy Center has provided a few additional wonky details.

First, even though the debt ceiling will be abolished for the next three months, that doesn't mean Treasury can just go on a wild borrowing binge to save up for May:

2. Treasury can’t build up an enormous cash hoard.

In principle, Treasury could use this reprieve to build up a pile of cash before the new limit is determined on May 19. For example, Treasury could issue an extra $500 billion in debt and hold the proceeds as cash to cover deficits once the new limit is in place.

But the bill drafters already thought of that. To prevent such gaming, the bill limits the obligations that could be financed with new debt. An obligation isn’t covered “unless the issuance of such obligation was necessary to fund a commitment incurred by the Federal Government that required payment before May 19, 2013.” In short, no funny stuff.

Second, May 19 won't be the next doomsday date:

3. Nevertheless, the bill could allow Treasury running room well beyond May 19.

We first hit the debt limit on New Year’s Eve. Since then, Treasury Secretary Geithner has raised cash by engaging in extraordinary (albeit now-familiar) measures such as stuffing IOUs into federal employee retirement accounts in place of the federal debt they own.

A big question is whether the bill would allow the Treasury Secretary to undo those extraordinary measures and reload for the next time we hit the debt limit. The folks at the Bipartisan Policy Center, who do a great job tracking the debt limit, believe that it would. If so, the bill would put off the day of debt limit reckoning well beyond May 19.

We first hit the debt limit on New Year’s Eve. Since then, Treasury Secretary Geithner has raised cash by engaging in extraordinary (albeit now-familiar) measures such as stuffing IOUs into federal employee retirement accounts in place of the federal debt they own.

A big question is whether the bill would allow the Treasury Secretary to undo those extraordinary measures and reload for the next time we hit the debt limit. The folks at the Bipartisan Policy Center, who do a great job tracking the debt limit, believe that it would. If so, the bill would put off the day of debt limit reckoning well beyond May 19.

Further reading:

--A rundown of the House's debt-ceiling bill.

--Suspending the debt ceiling is a great idea. Let’s do it forever!

Also on Wonkblog

How will Congress fix the sequester? Nobody knows!