Roundup: U.S. embroiled in recurring debt limit drama

The U.S. is again reaching its borrowing limit on Monday, setting stage for a recurring drama of debates between the Republicans and Democrats.

Although the drama may not hit the stage yet, as some non- partisan institutions still expect the U.S. Treasury Department to take "extraordinary measures" to ensure financing for the government till this fall, it's disturbing that such last-minute brinkmanship has become a new norm for policymakers on Capitol Hill.

The U.S government is reaching its statutory debt limit again on Monday. Despite the Treasury's call on the Congress to act to raise the debt ceiling time and time again, the Capitol has failed to react.

To ensure the government continues to be funded, the Treasury Department has taken some emergency measures, such as suspension of the reinvestments of two government pension funds from Monday and the issuance of the state and local government securities beginning on March 13.

The Temporary Debt Limit Extension Act passed by the Congress in February 2014 suspended the statutory debt limit through March 15, 2015. Beginning on March 16, the U.S. government's borrowing cap again takes effect at roughly 18 trillion dollars.

The debt limit is the maximum amount of debt that the Treasury can issue to the public and to the other federal agencies.

The drama surrounding the debt limit has repeated in recent years. In 2011, Standard & Poor's downgraded the U.S. credit rating for the first time due to the fiscal controversy between the Congress and the White House. In 2013, the U.S. government endured a 16-day shutdown which ended with a bill that extended the debt limit until February 2014.

Although debt default would be a disaster to the U.S. economy and the financial markets, it seems not be an urgent issue for now, as the last-minute negotiations and brinkmanship have become a routine on the Capitol Hill.

The Congressional Budget Office (CBO) projected that the Treasury's extraordinary measures would probably be exhausted and the Treasury would probably run out of cash in October or November.

According to a research report by the Bipartisan Policy Center, the policymakers have several months to address the debt limit this year, as the timing is fortuitous, the government has more extraordinary measures available, and the country's deficit has been declining.

The Congress and the White House have a long list of pressing items on the docket, such as the budget resolutions, appropriations and other priorities, and all these activities are likely to consume substantial time with heated debates, said the Center.

Senate Majority Leader Mitch McConnell has repeatedly said he has no designs on a government shutdown or debt default. But some Republicans continued to view the need to raise debt limit as a vehicle to push their priorities and call for more aggressive spending cuts.

In his letter sent to the House Speaker, Treasury Secretary Jacob Lew warned the Congress not to view the borrowing limit as a "bargaining chip", and urged the Congress to address the matter without "controversy or brinkmanship".

His statement indicated that the White House would be looking for a "clean" debt limit increase without other policy prescriptions from the Republicans.

As debates might not be a pressing issue for policymakers, the Wall Street is showing little sign of anxiety. Moody's Investors Service said in its recent report that U.S. government's ability to make timely interest payments would be intact, although the periodic impasse over raising the debt limit is a negative feature of the U.S. fiscal management. It added that the Treasury Department would prioritize payments on the U.S. debt above all others, ensuring that the country would not suffer a catastrophic default. Endite