With the debt limit having run out Feb. 7, Treasury Secretary Jack Lew said extraordinary measures – including suspending payments into some federal retirement plans – would need to be taken to pay the government's debts.
Another debt limit showdown in February could be brewing as Senate Majority Leader Mitch McConnell (R-Ky.) said Sunday that Republicans would press the White House to approve the Keystone XL pipeline in exchange for a debt ceiling hike.
With Congress back in session after the winter break, legislators are nearing agreement on an omnibus appropriations bill for the budget passed in December, but still need to raise the debt limit before it hits its ceiling in February.
With the debt-limit looming, Democrat and Republican leadership turned their attention away from the government shutdown and toward averting a financial crisis. House Republican leadership Thursday pushed a clean short-term increase that would raise the debt ceiling, the Washington Post reports, and it could go to vote late Thursday.
Many political observers predict the government shutdown will continue until the separate debt ceiling crisis is resolved, meaning the government is unlikely to open until Oct. 18. As the government continues into day 7 of the shutdown over a temprorary spending bill to fund the government, House Republicans and aren't budging from tying the bill to additional concessions from Democrats, although it remains unclear exactly what they could be, given Obama's insistence that he will not undermine the Affordable Care Act.
Threats of a government shutdown or a debt ceiling breach are especially dangerous when the economy is weak, Mark Zandi, the chief economist at Moody's Analytics, said Sept. 24 at a Senate hearing.
Treasury Secretary Jack Lew said Congress must authorize new borrowing authority before the federal government hits the debt limit, an event now projected to arrive mid-October, Lew said in an Aug. 26 letter (.pdf) to House Speaker John Boehner.
The Treasury Department says it has the authority to delay implementation of an Affordable Care Act provision requiring businesses with more than 50 employees to provide health insurance, but House Republicans are pressing the department to hand over memos used inmaking that decision.
The Treasury Department will stop investing in federal worker retirement and disability funds since Congress only suspended the debt ceiling until May 18, Treasury Secretary Jack Lew said in a May 17 letter (.pdf) to Congress. Congress has not approved normal borrowing authority after May 18, Lew said.
House Budget Chairman Paul Ryan (R-Wis.) and Treasury Secretary Jack Lew agreed during an April 16 committee hearing that corporate taxes should go down and the tax base should be broadened, but how to pay for those tax cuts was a point of contention.