Debt Ceiling Talks Go Down to the Wire — Again

The U.S. government will likely run out of money “in the first two weeks of June.” That’s when the Congressional Budget Office expects the Treasury Department will have exhausted the “extraordinary measures” it has been taking since Jan. 19 to keep paying the nation’s bills.

“If the debt limit is not raised or suspended before the Treasury’s cash and extraordinary measures are exhausted, the government will have to delay making payments for some activities, default on its debt obligations, or both,” CBO said in a May 12 report.

This type of warning comes every few years, when the nation reaches its debt limit and Congress needs to pass legislation to raise it.

Here we will review the last 10 times the U.S. hit the debt ceiling and had to rely on “extraordinary measures,” which are accounting strategies — such as suspending payments to retirement, health and disability funds for federal, civil service and U.S. Postal Service workers — to manage cash flow and debt.

Congress has raised the nation’s borrowing cap 78 times since 1960 – “49 times under Republican presidents and 29 times under Democratic presidents,” according to the Treasury Department.

The current debt limit was set at about $31.4 trillion in December 2021, when Congress raised it by $2.5 trillion, as explained by the Congressional Research Service in its report “The Debt Limit Since 2011.” 

At the time, the Democrats controlled the White House and Congress. They raised the debt limit without a single Republican vote in the Senate and with only one Republican vote in the House.   

This year, Republicans control the House, and they are demanding spending cuts and new or expanded work requirements for federal aid programs in exchange for raising the debt limit. 

The GOP-controlled House narrowly passed legislation on April 26 that would raise the debt ceiling by $1.5 trillion to $32.9 trillion. The bill would also cap discretionary spending over the next 10 years, which would reduce projected budget deficits by $4.8 trillion over that time, according to CBO’s analysis of the bill. 

Democratic leaders say spending cuts should be addressed in the annual appropriations process; they accuse the Republicans of holding the economy hostage.  

President Joe Biden and the Democratic in little movement, but Biden and McCarthy were more hopeful that a deal could be reached after a on May 16.