As the Treasury resorts to “extraordinary measures” to avoid defaulting on some financial obligations, Congress has continued to struggle with the necessary but embarrassing task of raising the federal debt limit.
Today the House finally took action, narrowly passing a year-long suspension of the debt limit without extraneous measures. Although Republicans control the House, only 28 of them joined with 193 Democrats to narrowly pass the measure, 221-201. A Senate vote could come later this week.
Today’s vote came after House Republican leaders gave up on a misguided plan to tie a debt limit increase to reversing a fiscal reform that Congress approved only weeks ago on pensions for working-age military retirees. (Senate Democrats have also prepared legislation to reverse that reform but not in connection with a debt limit increase.)
The current debt limit system only provides what Concord Coalition Executive Director Robert L. Bixby calls “a false impression of fiscal rectitude.” That’s why Concord, in an updated issue brief, is again urging elected officials to reform the debt limit so that it is better aligned with spending decisions and tied to some relevant standard such as the growth of the U.S. economy.
Congress had previously suspended the debt limit through last Friday. Treasury Secretary Jack Lew warned lawmakers on that day that administration officials were not confident that the “extraordinary measures” to avoid a default would last beyond Feb. 27.
Republicans have spent weeks discussing what concessions, if any, they should demand for an increase in the debt limit. Democrats, however, insisted that Congress should approve a “clean” increase in the limit.
Fixing the Debt Limit Frankenstein (Concord Blog Post)
Treasury Secretary’s Feb. 7 Letter to Congress
Debt Limit Background (Treasury)
Federal Debt and the Statutory Limit (CBO)