For all the talk about August 2 being the hard-and-fast deadline for Congress to raise the debt limit, that’s never really been the case. The Treasury department considers August 2 the day they’re likely to run out of headroom and either take drastic action to avoid a credit default, or begin missing interest payments and unleashing hell. It’s like the outer bound. But practically, White House officials now say, that means Congress needs to have a debt limit deal in hand about two weeks before then — a legislative lifetime — if they’re going to have enough time to crank out a bill and raise the debt limit in time to prevent calamity.
That’s based on Damien Paletta’s reporting for the Wall Street Journal. “The Obama administration believes congressional leaders must agree to a deficit-reduction deal by July 22 in order to raise the government’s borrowing limit in time to avoid a default in early August, according to Democratic officials with knowledge of the negotiations,” he writes. “The government needs a week or two to write and pass the necessary legislation and take the steps necessary to avoid missing a payment. ‘We’re down to the wire,’ one official said.”
Negotiators are as far apart on a deal than they’ve ever been. Which is a bad moment for your window of opportunity to shrink by two weeks.
