Washington, D.C. – Statement on congressional passage of short-term budget legislation by Shai Akabas, director of economic policy at the Bipartisan Policy Center:
“The short-term budget deal passed by Congress today was a positive sign that bipartisanship is possible between President Trump and Democratic leaders. But while the budget legislation means that the government won’t shut down or default on its obligations next month, it has only postponed the tough decisions.
“This action was taken to address the damage being wrought by Hurricane Harvey and will buy policymakers time to provide a larger emergency response package.
We currently believe that the debt limit “X Date” may occur sometime in March 2018
“However, the problem of addressing the overall budget for this year has only been delayed, and another continuing resolution will make it challenging for many government agencies to perform their functions. Over the summer, we saw spiking interest rates on U.S. Treasury bills and thus added taxpayer costs due to the debt limit. With the debt limit being reinstated on December 9, we can now expect those costs to recur in the coming months.
“While a formal projection at this early stage would be premature, we currently believe that the debt limit “X Date” – when the government can no longer pay all of its bills in full and on time – may occur sometime in March 2018. The uncertainty this far out – including yet-to-be-determined spending for Hurricanes Harvey and Irma and the possibility of income tax changes – cannot be overstated. We will continue to monitor cash flows and provide a projection when the data are sufficient to do so.
“This deal is encouraging, but it is only a start. Reaching across the aisle sooner rather than later on a long-term agreement will be the most effective way to address these challenges.”