The U.S. Congress could once again take up the task of raising the nation's borrowing limit after it tackles the job of preventing a series of tax hikes and spending cuts from kicking in on Jan. 2 and threatening the recovery. But many experts say lawmakers are likely to deal with the two issues – which are not directly related – together.
"If you're going to be dealing with one, you should be dealing with the other, and there's no reason they have to be done separately," said Chad Stone, chief economist at the Center on Budget and Policy Priorities. "It's about all the same fights."
Although the overarching question of how much money the government should spend is the same, the stakes and timing of the debt limit and fiscal cliff differ. The debt ceiling, which is the legal limit on the country's borrowing, is capped at $16.4 trillion. The Treasury Department expects the limit to be reached in late 2012 but can take special steps, or extraordinary measures, to push back the date on which the government defaults on its obligations until early 2013. Reaching the debt limit with no agreement to raise it would be disruptive to markets and is expected to inflict immediate harm on the economy.
Some members of Congress are seeking to explicitly tie the debt limit and fiscal cliff together. House Speaker John Boehner (R-Ohio) has said he will not allow any increase in the debt ceiling without greater spending cuts. For others, it may be a more practical matter of getting two unpleasant tasks over with. "My suspicion is [members] would like to get it done sooner in their careers, assuming they are reelected, rather than later," Bell said.
Much about the shape the discussions will take depends on the outcome of the congressional and presidential elections. And Congress has some flexibility to make short-term fiscal agreements (kicking the can on the cliff) or short-term debt-limit increases (kicking the can on the ceiling) until the new Congress is in place if a lame-duck agreement cannot be reached.
But no matter who wins, with compromise expected from both sides, ripping off the debt-limit and fiscal-cliff Band-Aid may be preferred to be done quickly. "I assume that members are going to want to get that off the table before they get sworn in a new Congress," said Brian Darling, a senior fellow for government studies at the conservative Heritage Foundation.
"It all gets married together. If Congress feels like they have to deal with the debt ceiling in lame duck, then the expiring tax cuts get married to it. The defense sequester becomes married to that whole debate. It all gets done in one big messy package," he said.