The gorilla in the room may sleep soundly for the rest of July and August, but expect a foul temper when he wakes up in September. At that time, Congress once again haggles over our debt ceiling.
Treasury Secretary Jack Lew tells us the government can operate under its existing borrowing limit until at least Labor Day, although it’s generally assumed the limit can be stretched until October or November.
Lew also called on Republicans to agree a no-strings-attached increase, but most analysts consider this hopeful request to be political posturing. More plausibly, we’ll be treated to another shining example of government dysfunction.
While we await the drama, I’ll preview another upcoming development that should set the tone for the battle – release of the Congressional Budget Office’s new long-term debt projections, which typically extend 75 years into the future. These are out later than usual this year, due to the Budget Control Act spending cuts that went through in the spring. Instead of the normal June publication, the CBO says to expect its report in September. In other words, just as borrowing limit negotiations begin to heat up.
But why wait that long?
I’ll share my projections here and now, using most of the same inputs and methods employed by the CBO. You may be surprised by the outcome.
