Remember that debt limit donnybrook we were all expecting this December? Turns out everyone was being a wee bit too optimistic about that:
Treasury Secretary Jacob Lew told Congress on Monday that after mid-October, the government would be able to make payments “with only the cash we have on hand on any given day.” In a letter to House Speaker John Boehner (R., Ohio), Mr. Lew projected the Treasury would have roughly $50 billion on hand by mid-October, and said this level “would be insufficient to cover net expenditures for an extended period of time.”
Mr. Lew also said that “on certain days, net expenditures could exceed such a cash balance,” which might mean the government couldn’t pay all its bills.
….The mid-October time frame is sooner than many on Capitol Hill had anticipated….Some believed that the government’s improving fiscal condition, bolstered by rising tax revenue and money coming in from Fannie Mae and Freddie Mac, could give the Treasury even more time, potentially until sometime in December.
Politically, this means that Republicans don’t really have the option of quickly passing a 2014 budget (or a short-term continuing resolution) and then taking some time off to plan for their latest round of debt ceiling hostage-taking at the end of the year. If mid-October really is the drop-dead date, it means that budget negotiations in late September and debt ceiling negotiations in early October pretty much run right into each other. It’s Fiscal Cliff v2.0.
I don’t quite know what this does to John Boehner’s fragile attempts to keep the lunatic wing of his party under control. Nothing good, probably. I’m also not sure what it does to President Obama’s promise not to negotiate over the debt ceiling. If all of this stuff get munged together, then everyone’s going to get mighty hazy mighty fast about what exactly is being negotiated.
So that’s that. Hazy is the new outlook. Stay tuned.