Federal Debt and the Statutory Limit, November 2013

by Sabrina I. Pacifici on November 20, 2013

CBO Report: “The debt limit—commonly referred to as the debt ceiling—is the maximum amount of debt that the Department of the Treasury can issue to the public and to other federal agencies. That amount is set by law and has been increased over the years in order to finance the government’s operations. The debt ceiling was suspended earlier this year—from February 4 through May 18—so that the Department of the Treasury had the authority to borrow any amounts necessary to meet the government’s operating needs during that period. The debt limit has again been suspended, this time through February 7, 2014. What Is the Current Situation? Currently, there is no statutory limit on the issuance of new federal debt because the Continuing Appropriations Act, 2014 (Public Law 113-46) suspended the debt ceiling from October 17, 2013, through February 7, 2014. The act also specified that the amount of borrowing that occurred during that period be added to the previous debt limit of $16.699 trillion. Therefore, on February 8, the limit will be reset to reflect cumulative borrowing through February 7. The amount of outstanding debt subject to limit is now around $17.1 trillion. If the current suspension is not extended or if a higher debt limit is not specified in law before February 8, 2014, beginning on that date the Treasury will have no room to borrow under standard operating procedures. Therefore, to avoid a breach of the ceiling, the Treasury would begin employing its well-established toolbox of so-called extraordinary measures to allow continued borrowing for a limited time. CBO projects that those measures would probably be exhausted in March. However, the timing and magnitude of tax refunds and receipts in February, March, and April could shift that date of exhaustion into May or June.”

  • Washington Post WonkBlog: “Note: A March deadline seems more likely at this point. A Treasury official tells me that there’s “no indication right now that extraordinary measures would last longer than a month. Due to inherent variability, the numbers can go either way — and sooner rather than later is probably more likely in this instance, due to the late open of the filing season.” (An analysis from the Bipartisan Policy Center also set the deadline before mid-March.)”

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