Debt Ceiling Wiggle Room Possible With Highway Transfer Delay

The U.S. may be able to delay hitting the debt ceiling by changing the timing of a required highway funding transfer, federal agencies indicated Tuesday.

The U.S. risks defaulting on its debt obligations in mid-December, timing based in part on a scheduled $118 billion transfer from the Treasury to the Highway Trust Fund on Dec. 15. The Treasury Department may, however, be able to defer part or all of that transfer, the Congressional Budget Office said in a statement Tuesday.

CBO, Congress’s nonpartisan scorekeeper, said transferring only amounts needed for immediate use would push the debt ceiling back by weeks, to “sometime in January.” The Federal Highway Administration indicated it could operate federal highway and transit programs without any infusion for several months.

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An FHWA spokesperson told Bloomberg Government Tuesday that the Highway Trust Fund has sufficient funding to continue programs into the spring or summer of 2022. The fund receives revenue from the federal motor fuels tax that’s inadequate to cover its outlays, so Congress periodically directs the Treasury to transfer money into it from the general fund.

The possibility of delaying the date the U.S. hits the debt ceiling would give lawmakers more time to wrangle with legislation to raise it, although it’s unclear the Treasury Department is open to the delay. Senate Majority Leader Chuck Schumer (D-N.Y.) and GOP leader Mitch McConnell (R-Ky.) said Tuesday they are negotiating on debt limit legislation.

Treasury Secretary Janet Yellen reiterated the department’s plans to transfer the money on Dec. 15, as required by the recently enacted infrastructure law (Public Law 117-58), during a hearing Tuesday. She called on Congress to change the debt ceiling “expeditiously.”

The Treasury Department didn’t immediately respond to a request for comment on whether it will change the timing of the transfer.

To contact the reporter on this story: Lillianna Byington in Washington at lbyington@bloombergindustry.com

To contact the editor responsible for this story: Sarah Babbage at sbabbage@bgov.com