House Majority Leader Eric Cantor (R-VA) announced today that the House next week will vote on a three-month increase in the debt limit. In addition to this short-term increase, the bill will require that both the House and Senate pass a budget by April 15, and failure by either chamber to pass a budget by that time would result in members of Congress not getting paid. (According to federal law, Congress is required to adopt a budget resolution by April 15 each year, though this deadline is often missed.) Rep. Paul Ryan (R-WI) proposed the idea to allow a short-term increase in the debt limit at a House GOP retreat this week. This would give House Republicans time to use two other looming budget deadlines – sequestration scheduled on March 1 and the CR expiring on March 27 – to demand spending cuts before the debt ceiling would need to be raised again. House Speaker John Boehner (R-OH) continues to state that any long-term increase in the debt ceiling must be preceded by substantial spending reductions. Meanwhile, at a press conference earlier this week, President Barack Obama reiterated his previous statements that he would not negotiate with lawmakers over raising the debt ceiling.

The U.S. Treasury Secretary Timothy Geithner stated in a letter to leaders of Congress earlier this week that the United States is expected to run out of funds to fulfill its obligations between mid-February and early March if the debt ceiling is not raised before that time. While the federal government formally reached its borrowing limit on December 31, 2012, the Treasury has been able to use “extraordinary measures” – such as delaying payments to government pension funds – to pay its bills. Once these measures are exhausted, the Treasury will no longer have enough cash on hand to meet its spending commitments. In the event the debt ceiling is not raised in time, it remains unclear whether the U.S. Secretary of the Treasury would have the legal authority or technical capacity to make some payments a priority over others. 

Links: Cantor Statement; Treasury Letter