There was one piece of good news for Republicans in Trump’s deal with Democrats


Gulf Business Expert e1ec7dcc1844187075a20263a4def692 There was one piece of good news for Republicans in Trump's deal with Democrats Business News  month measure government debt ceiling

The deal President Donald Trump struck with Democratic congressional leaders passed the House on Friday and was signed into law later in the day.

The bill included a provision that suspends the debt ceiling for three months, avoiding a serious default and an economic disaster.

The length of the suspension was seen as a win for Democrats, since it could allow Democrats more leverage when the issue would come up again.

The bill suspends the debt ceiling until December 9, rather than increasing it to a certain monetary level, meaning the cap will be reapplied that day at whatever debt level the government holds.

But the new deadline won’t mean lawmakers will need to raise the limit in December. It could be months before the government is in danger of defaulting on its obligations.

When the debt limit is hit, the Treasury Department can use what it calls “extraordinary measures” to prevent the US from going over the limit and defaulting on its debt. For instance, the federal government technically bumped up against the debt ceiling in March — when the last suspension ended — but only needed Congress to increase the limit by the end of September.

The language of the new legislation allows the Treasury Department to replenish its ability to use these extraordinary measures and, depending on how much the government receives in taxes, it could allow the Treasury to avoid a default for months.

Gregory Daco and Nancy Van Houten, economists at Oxford Economics, said Friday that the extraordinary measures would likely last for a few months.

“We estimate those measures will be worth about $275 billion to $300 billion in borrowing authority, compared to $365 billion currently,” said a note from Daco and Van Houten. “We forecast those measures will be exhausted in about two to three months. As such, Congress will be forced into another difficult debt ceiling vote in February or March.”

Quarterly corporate tax receipts would come in on March 15, potentially providing the Treasury another influx of cash. A massive inflow of personal tax receipts follows in April. That means, theoretically, that if the mechanics work out in such a way, the debt ceiling issue could be pushed back until next summer.