The House Republican plan to extend the debt ceiling for six weeks would permanently ban the Treasury Department from using extraordinary measures to avoid default, congressional aides said.
The provision would ban practices, used by Democratic and Republican administrations for decades, which have effectively allowed the Treasury to limit investments in pensions and other funds when the government bumps up against its borrowing limit. These steps have extended the time that Treasury can continue borrowing and paying the nation’s bills while Congress debates terms for raising the debt ceiling.The White House hasn’t said it whether it would accept the condition as part of any deal, though it effectively would be surrendering tools it uses to avoid falling behind on federal payments. The Democratic-led Senate could reject the provision.
Even though the steps are called “emergency” measures, they have become employed so routinely during recent fiscal standoffs that Congress often waits for the emergency steps to be exhausted before beginning negotiations on raising the borrowing limit.
Congress earlier this year suspended the debt ceiling until mid-May, but the Treasury Department has used emergency measures for five months to allow the government to continue borrowing money and paying bills. These emergency measures will be exhausted by Oct. 17, the department has said.
In 2011, the government hit the debt ceiling in mid-May but used extraordinary measures to continue borrowing money and paying bills until early August. The emergency measures have lasted longer in 2013 in part because the deficit is smaller and there is more tax revenue than two years ago.
House Republican leaders are in talks to extend the current debt limit until Nov. 22. One concern among Republican aides had been that Treasury could use the GOP’s proposed six-week extension and then use emergency measures to continue borrowing money and paying bills for six additional months. But in trying to remove this flexibility, Republican leaders moved to permanently take such powers off of the table.