Can Congress go 44 days without piling on more debt? You’ve seen the stories. Congress is facing a looming deadline Saturday evening to raise its borrowing authority from August. Yet, in the wake of the debt ceiling, Congress has been unable to get a bipartisan deal that would extend the 2001 and 2010 caps and avoid default on debt that has now exceeded that.
Congress has tried to get an agreement between two Republican-led caucuses: the moderate Republicans of the House and the Tea Party conservatives in the Senate. These groups are far apart on almost every issue, but on this one they have a deal. The problem is they don’t have enough to show for it.
If Congress and the White House don’t come up with a compromise before Saturday, the debt ceiling will not be lifted until the end of the year.
The deal brokered between the House and Senate would increase the debt limit by $6 trillion, or $948 billion. As you can see from the chart below, when combined with the bill for the next round of budget cuts known as the sequester, the debt limit would be raised by $715 billion.
The sequester itself is a big problem. If Congress fails to raise the debt limit and has to pass yet another measure to do so, the sequester caps off automatic spending cuts on a series of programs. If the sequester is allowed to go forward, it would add $1.8 trillion to the debt limit over the next 10 years.
The deal would avoid that sequester. But it would cost the U.S. economy $8 trillion, or about $2 trillion more than the deal would avoid.
The agreement would also raise the debt ceiling by $1.2 trillion through 2018.
That’s a lot of debt for a couple of weeks. But it’s not the worst that Congress could default on. Just one day after the deadline passes, Congress could borrow a little more because the Treasury secretary can extend borrowing authority with a signing statement. A signing statement