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.”
This is a companion discussion topic for the original entry at https://talkingpointsmemo.com/?p=109971