The U.S. debt ceiling deadline that will likely occur in late October or November may trigger a public policy crisis unless Capitol Hill Republicans and President Barack Obama act to avert one.
The reason? Some Republicans say the debt ceiling issue will be coupled with the issue of funding the U.S. government beyond Sept. 30. Congress must pass a temporary appropriations bill known as a continuing resolution or a regular budget by Oct. 1 to fund government agencies next fiscal year and prevent a shutdown.
“Those two are going to be weaved together whether there’s a 30-day separation or not,” Rep. Lee Terry told the Hill.
The last budget resolution fight occurred in late 2012 and was settled with a late New Year's Day 2013 agreement that angered many Republicans because it contained an income tax increase on upper-income adults.
The last debt ceiling fight in July/August 2011 brought the U.S. to the brink of default, and although the default was averted, it resulted in a damaging, unprecedented downgrade of the U.S. government's debt.
Economists and market analysts generally agree that a U.S. government default would send a shock wave through global financial markets. U.S. government bonds are considered the safest in the world, and many other interest rates are priced based on the 10-year and 30-year U.S. Treasury notes' prices. A downgrade of the U.S. government's debt, let alone a default, would cause institutional investors to "reprice" risk -- something that would almost certainly send interest rates higher, among other damaging consequences for the U.S. and global markets and economies.
Several Republicans told the Hill that they're worried about the looming fiscal crises because they are yet to receive any directive from GOP leaders. The House will be in recess for much of August and when its members return in September they will have only nine legislative days -- meaning the House Republicans will be under immense pressure to keep the doors of government agencies open and prevent a delay in paying debt obligations.
The lack of directives doesn’t mean leaders are going to stand by idly, however. Indeed, reports are that House Speaker John Boehner, R-Ohio, is planning on being more aggressive in the fall because the ability of the GOP majority to move legislation through the House depends on it.
“The only two things that really risk the Republican majority in 2014 would be if we shut down the government or if we defaulted on the debt,” Rep. Tom Cole, R-Okla., told the National Journal. “So I think these demand real leadership. I do think those are far more important than immigration, because, again, they’ve got real-live consequences and real dates.”