Republicans and Democrats appear light-years apart on an agreement to raise the national debt limit, which the US could hit by mid-October. That leaves just weeks to move each side off its opening stance.
J. Scott Applewhite/AP
The dynamics of the partisan rift over budget matters have suddenly changed, gaining new urgency thanks to a determination by the US Treasury that it will run up against its borrowing limit by mid-October.
That’s coming up quickly, moving debate over this Congress-imposed cap on the national debt onto the legislative calendar right alongside a parallel debate in Congress about approving a budget for the new fiscal year that starts Oct. 1.
Right now, Republicans and Democrats appear light-years apart. Many conservative lawmakers are pushing to link a hike in the debt limit with plans for new spending cuts.
President Obama says raising the borrowing cap is simply a matter of allowing already-approved federal spending to occur – not something that should become a bargaining chip in budget talks.
What if Republicans and Democrats can’t agree on a debt-limit hike?
According to Treasury Secretary Jacob Lew, the government would run up against the current ceiling – a national debt of $16.7 trillion.
The economic implications are large.
Failure to raise the debt ceiling could throw the US government into a position of being unable to meet its financial obligations – a position that many investors would view as a debt default. It could prompt a credit-rating downgrade. It would affect millions of Americans as routine payments for things like military salaries or Medicare stalled or slowed.