WASHINGTON (AP) — The likely deadline for Congress to prevent the government’s first default will be later than earlier thought, a Washington think tank has found.
The Bipartisan Policy Center said Friday that the government probably won’t reach the brink of default until early September or early October. It had previously said default would come in July or August.
Congress acted to suspend the government’s borrowing cap in February, and it will be reset next month. The Treasury Department then can resort to accounting steps to prevent the government from defaulting on bondholders or other obligations such as Social Security.
A 2011 battle between President Barack Obama and Republicans controlling the House over raising the so-called debt ceiling brought the nation close to default and resulted in a hard-fought budget deal. Obama says he won’t be bullied on the debt limit again, but many in Washington believe the need to increase the borrowing cap later this year will prompt some kind of budget bargain.
The think tank said higher tax revenues and lower spending — in part because of across-the-board spending cuts that kicked in after Congress couldn’t agree on a follow-up budget pact — are responsible for the additional leeway. It added that if the government can get through a cash crunch in early September, it will be able to make it until early October before default.
Treasury is declining to reveal its estimate of when the default date would come, saying there’s too much uncertainty.