Analysis: Debt Limit to Increase More Than $1 Trillion After Suspension
Washington, D.C.– The Bipartisan Policy Center’s analysis of the February 9 federal debt limit suspension, part of the Bipartisan Budget Act of 2018, indicates that the debt limit will ultimately be reinstated at close to $22 trillion when the suspension expires on March 1, 2019. That new level will be more than $1 trillion higher than the prior debt limit before the suspension was signed into law, according to BPC’s projections.
BPC’s preliminary analysis also finds that Treasury will likely have enough cash on hand and “extraordinary measures” to operate the government until at least the summer, if not the fall, of 2019.
“Congress has bought itself quite a bit of breathing room with this most recent suspension,” said Shai Akabas, BPC’s director of economic policy. “But that doesn’t mean lawmakers should ignore the debt limit until the next critical deadline. Hopefully, the recent budget agreement sets the table for productive discussions well before the federal government once again nears the debt limit.”
Hopefully, the recent budget agreement sets the table for productive discussions well before the federal government once again nears the debt limit.
New analysis from BPC’s economic policy team projects that this budget agreement, along with other recent changes in fiscal policy—such as the recently passed tax law—will cause a federal government deficit of more than $1 trillion next year. This figure is hundreds of billions of dollars higher than the Congressional Budget Office projected just last June.
“While bipartisan collaboration is always welcome, it’s disappointing that Congress and the White House decided to go on a spending spree and leave behind any discussion of fiscal responsibility,” said Akabas. “With no substantive discussion of how to address the underlying drivers of federal debt, our fiscal policy is on track to put more than a trillion dollars on the federal government’s credit card in the next year.”
As always BPC’s debt limit projections are subject to a degree of economic and policy uncertainty.