Trump Deal Likely to Push Next Debt Limit Deadline into March

The deal President Donald Trump signed into law to extend the debt limit will likely push the next debt ceiling deadline into March, according to a preliminary study by the Bipartisan Policy Center, according to The Hill.

“While a formal projection at this early stage would be premature, we currently believe that the debt limit ‘X Date’ – when the government can no longer pay all of its bills in full and on time – may occur sometime in March 2018,” said Shai Akabas, BPC’s director of economic policy.

The debt limit’s deadline will have significant political implications, with Democrats hoping to use the must-pass legislation to increase it to approve a solution for young immigrants protected under the Deferred Action for Childhood Arrivals (DACA) program, and conservative Republicans seeking to use it to limit spending or regulations, The Hill comments.

Trump’s deal, reached with Democratic leaders last week, pushed the debt deadline to December 8. However, the Treasury Department has in the past extended its legal borrowing limit using loopholes, calling them “extraordinary measures.” Last March the U.S. technically hit its debt limit, but extraordinary measures put off the true deadline for six months.

The Hill adds that the Treasury’s ability to stretch its extraordinary measures, which most consist of borrowing from internal pools that do not technically add to the federal debt, depends largely on how quickly tax revenue comes in and how many bills come due.

If the Treasury is able to extend the extraordinary measures into mid-April, the inflow of income taxes could stretch its abilities by a few more months. If Congress is able to pass a tax reform bill by 2018, one that could be applied retroactively to 2017, the tax revenue may be significantly lower than expected.

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