Tax Revenue Prolongs Debt Debate

The New York Times reports:

WASHINGTON — A greater-than-expected increase in tax revenue has extended by about a month, until early August, the federal government’s ability to pay its bills without an increase in the debt ceiling, the Treasury Department said Monday.

The new estimate creates a significant grace period for Congress to consider an increase in the maximum amount that the government can borrow, a step that House Republicans say they will not take without an agreement to curb spending.

Federal borrowing is still likely to hit the legal limit on May 16, the Treasury said, so this week it will begin to take emergency steps to buy additional time under the cap. Those steps, plus the increase in tax receipts, which have reduced the need for borrowing, will delay a crisis by about a month — to August from July.

“While this updated estimate in theory gives Congress additional time to complete work on increasing the debt limit, I caution strongly against delaying action,” the Treasury secretary, Timothy F. Geithner, wrote Monday to lawmakers.

Mr. Geithner has warned repeatedly that failing to raise the ceiling would force the government to default on its debts and obligations. That, he wrote, “would have a catastrophic economic impact that would be felt by every American.”

Many Republicans have publicly agreed that Congress must raise the ceiling, although they insist that the White House must first agree to some form of meaningful spending limits. A vocal minority of members, however, have said that they are reluctant to raise the limit, and that Mr. Geithner and others ringing alarm bells have overstated the possible consequences of leaving the limit in place.

The debates have become a standard feature of Washington politics in the last two decades, cropping up when federal borrowing nears the limit while power is divided between the two parties. In 2006 and 2007, it was Democrats who inveighed against Republican arguments that debt increases were necessary.

In the past, Congress has always resolved its differences in time to avoid a debt crisis.