With some steps to delay default, budget experts believe the government can make to August, possibly September, before the government would grind to a halt.

You may remember that the debt ceiling became a major issue a couple of times during the Obama years. Last time around, Barack Obama and the Republicans in Congress agreed to a horrendous deal which suspended the debt ceiling until several months after the 2016 election…

Since President Barack Obama signed the “Bipartisan Budget Act” on Nov. 2, 2015 there had been no legal limit on the amount of money the federal government could borrow until now. That law included a section entitled “Temporary Extension of Public Debt Limit.” It said that the law imposing a limit on the federal debt “shall not apply for the period beginning on the date of the enactment of this Act and ending on March 15, 2017.”

During the 16 and a half months between the signing of that deal and today, the U.S. national debt rose by a whopping $1,414,397,000,000 (that’s $1.4 trillion for those who have trouble with 000s.)

But now the U.S. national debt will not be allowed to rise by another penny until the debt ceiling is raised or suspended once again.

The National Debt and Deficit

The United States has a national debt: the cumulative amount of money it owes to investors (and to future retirees). And because the feds take in less money than they spend each year, we also have an annual deficit. So every month, simply by doing its business—paying benefits and building roads, purchasing weapons systems and paying Medicare bills—the government adds to its total debt.The simple solution to the debt ceiling is simply to pass a law raising the debt ceiling. Much tougher decisions would be to cut spending or to increase revenue either by taxes or fees.

In the Obama years, the Republicans in control of Congress tried to use the debt ceiling as a lever to get the president to agree to cut entitlements or slash spending, largely unsuccessfully.

2011 Deficit Crisis

In 2011, just two days prior to when the Treasury estimated the borrowing authority of the United States would be exhausted, Republicans — who had been holding out on increasing the deficit — agreed to raise the debt ceiling in exchange for a complex deal of significant future spending cuts. The crisis sparked the most volatile week for financial markets since the 2008 deficit crisis, with the stock market trending significantly downward. The crisis led the credit-rating agency Standard & Poors to downgraded the credit rating of the United States government for the first time in the country’s history, though the other two major credit-rating agencies, Moodys and Fitch, retained America’s credit rating at AAA. 

The Government Accountability Office estimated that the delay in raising the debt ceiling increased government borrowing costs by $1.3 billion in 2011 and also point to unestimated higher costs in later years. Of course, no one wants to see that kind of crisis happen in 2017.

Avoiding a Government Shutdown

Up to this point, there has been very little urgency by either party to move a spending bill forward. However with summer looming and cash reserves running low, the Congress should want to get back to work on this as soon as they return from their Easter Break on April 24.

In a complete reversal from how Donald Trump felt about the debt ceiling back in 2013, the Trump administration will push to get the debt ceiling raised. The following comes from the L.A. Times…

Trump sided with hard-liners in 2013, publicly opposing an increase. “I cannot believe the Republicans are extending the debt ceiling — I am a Republican & I am embarrassed!” he tweeted then.

If the Republicans control the White House, the Senate and the House of Representatives, why will it be so difficult to get an agreement on a spending bill?

First, look at how difficult it was for the Republicans to agree on a bill to repeal and replace Obamacare. More importantly, any bill to fund the government is going to require 60 votes in the Senate. The “nuclear option” that the Republicans just used to push the Gorsuch Supreme Court nomination through is not available in this case under current Senate rules.

So the Democrats have leverage, and they will use it. Senate Minority Leader Chuck Schumer is already promising to block any spending bill that includes funds for a border wall or that defunds Planned Parenthood.

“If Republicans insist on inserting poison pill riders such as defunding Planned Parenthood, building a border wall, or starting a deportation force, they will be shutting down the government and delivering a severe blow to our economy,” Schumer said in a statement.

On the other side, there are members of the Freedom Caucus – the conservative Republican coalition that refused to support Trumps’s health care bill because it wasn’t conservative enough — that will absolutely not vote for any spending bill that includes funding for Planned Parenthood. But without the Freedom Caucus, there aren’t enough Republican votes to get a spending bill through the House of Representatives.

It may turn into a game of chicken between Trump and the Democrats, and it doesn’t appear either side will give in easily.