Congressional leaders may have more time to work out a deal this fall to increase the federal borrowing limit, after new projections from Congress’ scorekeeper showed tax revenues have been greater than expected this year.
In July, the Treasury Department estimated the government would hit its $18.1 trillion borrowing limit at the end of October. CBO, however, now projects the debt ceiling will not need to be increased until mid-November or early December, while noting there is a level of uncertainty when determining the exact date.
Boosting the debt ceiling is one of several fiscal tasks on the congressional agenda when lawmakers return next month for what is shaping up to be a tense fall of negotiations. Also left to be completed is the annual appropriations work, the fiscal year ends Sept. 30, and figuring out a long-term source of funding for highway projects with the current authority set to expire on Oct. 29.
Republican leaders in both the House and the Senate are vowing to avoid a government shutdown or debt default in the coming months, but conservatives in both chambers have threatened to use the upcoming fiscal fights to advance unrelated political issues such as defunding Planned Parenthood. The later debt limit deadline may give leaders more time to try to bring conservatives on board, but aides from both parties said that formal discussions have not begun.
Having more time before the debt limit is hit could also increase the chances that Congress will try to wrap all of its remaining fiscal work into one year-end deal, which many lawmakers are expecting to be the case.
Any broader deal would likely require Republicans to agree to lift strict spending caps included in the 2011 Budget Control Act, also known as the sequester. But some Republicans on Tuesday argued the CBO report shows that the spending restrictions have helped shrink deficit and are necessary to control future debt.
“I would caution those who would use this report as an opportunity to take these short term-savings and push for more spending,” Senate Budget Committee Chairman Sen. Mike Enzi (R-Wyo.) said in a statement. “If our nation is serious about balancing our budget and reducing America’s debt, real, substantive budget reforms and savings will have to be on the table during any spending negotiations.”
The budget office projects that the deficit for fiscal 2015 will be $426 billion after hitting $485 billion in fiscal 2014. This deficit projection released Tuesday is lower, by about $60 billion, than estimates the office released in March because revenue from corporate and individual tax receipts have been greater than expected.
Senate Majority Leader Mitch McConnell (R-Ky.) said earlier this month that negotiations over the annual spending bills will have to begin soon, but it is unclear how much Republicans are willing to give. Senate Democrats and President Obama have been calling for an equitable increase in both military and domestic spending.
Congress is expected to pass a stop-gap funding bill next month before the start of the fiscal year on Oct. 1 to buy more time for these negotiations.
The budget office on Tuesday also sounded its usual alarm that the government’s long-term budget path remains unsustainable due to the growing cost of entitlement programs, such as Medicare and Social Security.
It remains unlikely that any changes to these programs will be seriously considered during the remainder of the Obama administration due to deep differences between Democrats and Republicans over the issue.
But that didn’t stop some lawmakers from using the release of the latest CBO report to call for action soon.
“Our social safety net is coming apart at the seams and unless Congress acts to implement concrete, structural changes to Medicare, Medicaid, and Social Security, they won’t be there for future generations,” Senate Finance Committee Chairman Orrin Hatch (R-Utah) said in a statement. “The status quo is unacceptable. If we want to guarantee the solvency of these programs for our children and grandchildren, then we must act and we must act now.”