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President’s Forum: Respected Think Tank Sounds Alarm on Debt Limit

John Hodge, PHADA President

I mentioned in the July 17 column that Congress will have to raise the debt limit ceiling before the end of September. Otherwise, the federal government will run out of borrowing authority, potentially setting off a chain reaction of serious economic problems including the inability to pay some of its bills. A respected Washington think tank recently published a report indicating that the government may have to act even sooner. The report is being taken seriously in Congress, which must also increase strict budget caps to prevent the return of the much-dreaded sequestration.

The Bipartisan Policy Center (BPC) said there is a risk that the debt limit “X Date” – the date when the federal government can no longer pay all of its bills – could occur in the first half of September. The BPC noted that as the summer progresses, the U.S. Treasury Department will continue to expend its cash on hand and take “extraordinary measures” – legally permissible accounting maneuvers that enable limited additional borrowing authority when the debt limit is reached, as it was this past March.

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