There’s always a clock running on Capitol Hill, especially in September.
As an institution, Congress runs on its own time. Legislation can take years to develop, moving in and out of new sessions and election cycles. But even Congress can’t stop time or what’s anticipated to be a showdown over the borrowing limit of the United States.
Yes, Congress is back to debating the debt limit. This year, the debt ceiling and the federal government’s budget are running on the same timeline. Congress needs to act on both by the end of September, though the Congressional Budget Office estimates the drop-dead date for the debt ceiling may be in October or November.
The patience of investors will wear thin quickly without assurance as soon as this week that time won’t run out without deals in place.
Personalities, politics and parliamentary procedures will all be utilized by Democrats and Republicans in their efforts to extract what each party wants from the other as they barrel toward the end of September. The GOP is against raising the country’s borrowing limit. And the Democrats seem poised to force Republicans to actually cast votes against it. Such a vote would shut down the government and possibly trigger a default.
“Failing to increase the debt limit would have absolutely catastrophic economic consequences,” Treasury Secretary Janet Yellen warned a Senate subcommittee in June. “I believe it would precipitate a financial crisis. It would threaten the jobs and savings of Americans at a time we’re still recovering from the COVID pandemic.”
Intertwined in this political bargaining are President Joe Biden’s $3.5 trillion infrastructure plan, the Democrat’s voting rights legislation and pressing questions about the administration’s poor pull-out of Afghanistan.
Investment markets have been focused on strong corporate financial performance and stronger economic data, while keeping a wary eye on inflation, the Federal Reserve and the COVID-19 delta variant.
Politics has been background chatter, but with the clock ticking for Congress to make big spending and borrowing decisions, time is running out for who blinks first — the politicians or investor portfolios.
Financial journalist Tom Hudson hosts “The Sunshine Economy” on WLRN-FM in Miami, where he is the vice president of news. He is the former co-anchor and managing editor of “Nightly Business Report” on public television. Follow him on Twitter @HudsonsView.