On Thursday the Senate approved of legislation suspending the statutory debt ceiling until May 18. President Obama will sign the bill, meaning that the next fiscal deadline is March 1 regarding the sequester.
The debt limit fight will likely be put off past May because the Treasury Department will again be able to use “extraordinary measures” to hold off a default once the limit is reached.
The bill also includes a “No Budget, No Pay” provision stipulating that members of Congress will have their paychecks withheld if their respective house does not pass a budget by April 15. The leaders of each chamber have promised to produce a budget this year.
The economic stakes are too big to play games with the debt ceiling, but policymakers have to seriously address the debt. Only a long-term, comprehensive deficit reduction plan will put an end to the long line of fiscal deadlines that await, as illustrated by the graphic above.
The stakes are too high for inaction. As Fix the Debt Campaign head Maya MacGuineas said in a statement:
Suspending the debt ceiling doesn’t make the threat of our dangerous debt trajectory magically go away. This temporary waiver serves as a reminder that the country is borrowing too much and changes will have to be made. Our growing debt burden will imperil our capacity for a sustained recovery, higher levels of economic growth, and the budgetary flexibility needed to respond to threats and opportunities in the years to come.