Analysis: Treasury projects Congress needs to raise the debt ceiling by late summer

CQ is reporting that the “The Treasury Department announced [May 1] it expects to run out of funds to finance government obligations as early as this summer, noting that cash balances are rapidly dwindling as the agency employs ‘extraordinary measures’ to remain under the $22 trillion debt ceiling. ‘Based on currently available information, Treasury expects that extraordinary measures will be exhausted sometime in the second half of 2019,’ Treasury Deputy Assistant Secretary for Federal Finance Brian Smith said in a statement. ‘It is critical that Congress act to increase the nation’s borrowing authority, and Treasury urges Congress to act promptly on this important matter.’”

Takeaway

In prior Congresses, the need to raise the debt ceiling was an occasion to at least discuss the federal debt load. And, even sometimes, to take action — like in 2011 when the Budget Control Act gave us sequestration.  

Given we’re coming up on an election year, it’s unlikely they’ll be much more than lip service paid to the growing federal debt. With 2020’s election at most 15 months away by the “X date” (the projected date when the U.S. Treasury has to start prioritizing payments), my guess is we’ll get a “clean extension” (free of controversial policy provisions) that will put us well into 2021. 

From a healthcare perspective, the reason to watch is that the debt limit extension is one of the must pass vehicles on which any expiring Medicare/Medicaid “extender” and/or surprise billing legislation can catch a ride. Therefore, for Medicaid DSH hospitals, it will likely be at least the end of the summer before we know whether those cuts will be further delayed.