Treasury Secretary Jack Lew said Monday the nation will hit its debt limit in mid-October, setting up a potential clash between the White House and some House Republicans who say they will tie their votes on raising the debt ceiling to defunding the health law. Also in the news, a survey of business economists cites future deficits as the nation's most pressing problem, which will be exacerbated by aging baby boomers reliant on Social Security and Medicare.
The Washington Post: U.S. Faces Mid-October Deadline To Raise Debt Limit
Republicans are demanding significant new spending cuts in exchange for increasing the nation’s $16.7 trillion debt limit, with some GOP lawmakers insisting on a delay or the scrapping of President Obama’s signature health-care law. Obama, meanwhile, says he will not negotiate on the debt limit, the government’s legal cap on borrowing. With the two sides far apart, there is no clear path to resolving the differences. Not raising the limit would ultimately lead to a default, undermining the nation’s credit (Goldfarb, 8/26).
The Wall Street Journal: U.S. Treasury To Hit Debt Limit In Mid-October
The White House has spent several months working with a small group of Republican senators to discuss a budget agreement that some Democrats had hoped would clear the way for an increase in the debt ceiling. Those talks have not progressed beyond an early stage, people familiar with the process have said. House GOP leaders haven't disclosed their strategy for dealing with the debt-ceiling deadline, focusing instead on what to do to avoid a partial government shutdown at the end of next month. They have held talks with rank-and-file members over a proposal to fund the government at existing levels for the next two or three months, a proposal that many Democrats have indicated they could reluctantly accept. A vocal minority of Republicans, however, have said they would vote for a budget bill only if the White House's health-care law is defunded, a demand Democrats wouldn't accept—setting up a clash that could make it more difficult to reach a bipartisan agreement (Paletta, 8/26).
The Associated Press/Washington Post: Treasury Secretary Says U.S. Will Hit Debt Limit In Mid-Oct, Urges Congress To Raise It
Lew said it’s impossible for Treasury to predict exactly when borrowing limit will be reached. But he warns that if action isn’t taken soon, the government could be left with $50 billion in cash by mid-October. He says that wouldn’t be enough to cover Social Security payments, military personnel salaries, Medicare and other programs for an "extended period" (8/26).
Politico: Debt Limit To Be Hit By Mid-October
The deadline, sooner than what some forecasters had estimated, comes amid concern that Congress has no plan for handling the needed increase to the government’s borrowing authority. The Obama administration has said it will not negotiate over raising the debt limit, while Republicans have a long list of demands, including revising President Barack Obama’s signature health-care law (Faler, 8/26).
PBS Newshour: Republicans’ Health Care Funding Concerns Brew Spending Showdown
Lawmakers are headed for a clash of political will over funding the implementation of President Barack Obama's signature health care law. The government is funded through Sept. 30, which means there is little time to craft a new spending plan, and it seems the only agreement on the topic is that it's going to be an ugly fight (Bellatoni and Polantz, 8/26).
Los Angeles Times: Long-Term Deficit Is Chief Fiscal Problem Facing U.S., Survey Says
Many economists believe deficits in the 2020s and 2030s are a more pressing issue than current deficits or those that will be racked up in the next decade, according to a survey by the National Assn. for Business Economics. Economists were mixed on how to fix the long-term problem, which will be exacerbated by aging baby boomers who will increasingly rely on Social Security payments and Medicare (Li, 8/26).
The Associated Press/Washington Post: Survey Of Business Economists Calls Deficits In 2020s And 2030s The Biggest US Fiscal Problem
The NABE said 39 percent of those surveyed felt the best way to address the deficit-to-gross domestic product ratio in the next few decades is a mix of spending restraint and increased revenue. It said 32 percent believe the best single tool would be greater spending restraint, and 20 percent said enacting policies designed to encourage economic growth would be the best tactic. Ballooning costs for Social Security and Medicare as the U.S. population ages are expected to result in growing long-term budget deficits (8/26).
The Associated Press: Sector Wrap: Health Care Spending
A Stifel Nicolaus analyst said Monday that the threat of health care spending cuts could hurt a variety of stocks in the health care sector, including companies that own hospitals, rehabilitation and nursing facilities, and companies that own health care real estate. Because of an obsolete 1990s budget law, Medicare payments to doctors are scheduled for cuts every year (8/26).