Wells Fargo economists John E. Silvia and Michael A. Brown sent out a note today titled, “Another Debt Ceiling Deadline.”
Yes, the debt ceiling is back and we’re quickly approaching it.
Congress has a few things to take care of in the next few weeks, including the omnibus spending bill, the farm bill and possibly an extension of emergency unemployment benefits.
Soon after that, it will face its toughest challenge of the year when Democrats and Republicans will have to find a way to prevent us from defaulting.
The deal to end the government shutdown in October raised the debt ceiling until February 7. After that, Treasury can employ extraordinary measures to extend the deadline even further. How long is still up in the air – it could come as soon as late February or as late as June depending on the amount Treasury collects in tax receipts.
Either way, the debt ceiling is coming and Republicans have been making it very clear recently that they are gearing up for another fight. President Obama and Democrats are expected to employ the same strategy as they used last fall in refusing to negotiate whatsoever. They (rightly) don’t believe that Republicans should be able to demand a ransom for raising the debt ceiling.
This sets up yet another battle that risks hurting the economy just as the recovery seems ready to speed up. Yippee.
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