The federal government’s debt ceiling will return on Monday following a 14 month suspension. This is the first of many important fiscal deadlines that Congress must consider before the end of the calendar year. These deadlines represent opportunities for Congress to control spending growth and reform entitlement programs.
Below is a list of the major fiscal deadlines:
- Debt Ceiling: The federal debt ceiling limits the amount of outstanding federal debt. When the debt ceiling returns on March 16, it will be approximately $18.1 trillion. Congress is not expected to raise the limit this weekend, so the Treasury Department will have to use its flexibility to fit the debt within that limit. With these Treasury procedures, the Congressional Budget Office expects that congressional action can be put off until October or November.
- Sustainable Growth Rate: The Sustainable Growth Rate (SGR or “doc fix”) was passed in 1997 and attempts to control Medicare spending growth. If Medicare grows faster than the legislated formula, reimbursements to doctors are cut. However, Congress has never let the cuts go into effect. The current relief from cuts expires on April 1. If Congress doesn’t act, reimbursements would be cut by 20 percent. Congress is expected to pass a short-term patch, the 18th time it will have done so in 13 years.
- Budget Resolution: The House of Representatives and the Senate are supposed to pass the annual budget resolution by April 15. The budget resolution sets the broad trajectory of spending for the upcoming fiscal year. Both chambers are expected to release their budget drafts during the week of March 16 to give themselves several weeks to work through this process and provide an opportunity to reconcile the two proposals.
- Highway Trust Fund: The Highway Trust Fund will become insolvent on May 31. For a number of years, the Highway Trust Fund has spent more than it collects in revenue from the federal gas tax. Its current annual imbalance is $14 billion. Congress will need to figure out a way to balance the trust fund’s spending and revenue.
- Export-Import Bank: The charter for the bank expires on June 30. The bank “provides access to favorable financing for the foreign customers of some U.S. companies.” It essentially provides handouts to large companies, namely General Electric and Boeing who receive the bulk of the benefits. Congress must decide whether to extend, reform, or end the bank.
- Appropriations Bills: Federal spending is governed by 12 appropriations bills, which provide detailed spending instructions for federal agencies and departments. These 12 bills, or a substitute, must be passed by the end of the fiscal year on September 30. If these spending levels are above the amounts set by the 2011 bipartisan Budget Control Act, automatic spending cuts, known as the sequester, will take effect. The cuts hit both defense and nondefense parts of the budget.
- Children’s Health Insurance Program: The Children’s Health Insurance Program (CHIP) expires on September 30. CHIP provides health care benefits to children whose family income is below 200 (or 250) percent of the federal poverty level, approximately $48,000 for a family of four. Congress must decide if it will extend the program, and if so, how that will be done.
Congress has a full plate. Each of these items presents a challenge to the new Republican Congress. Will they resist calls to increase defense spending? Will they control domestic spending? Will they use their leverage to make some modest reforms to entitlement programs?
Next week’s budget resolutions will provide a glimpse into Congress’s thinking and set the tone for the remainder of the calendar year.