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Overview of the Debt Limit and Extraordinary Measures

Presentation by Meredith Decker, an Associate Analyst in CBO’s Budget Analysis Division, to Congressional staff, October 19, 2015: “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. In March 2015, the debt ceiling was reached, and since then, the Secretary of the Treasury has taken a number of “extraordinary measures,” as authorized by law, to borrow additional funds without breaching the debt ceiling. CBO projects that if the debt limit remains unchanged, the Treasury will begin running a very low cash balance in early November, and the extraordinary measures will be exhausted and the cash balance entirely depleted sometime during the first half of November. At such time, the government would be unable to fully pay its obligations, a development that would lead to delays of payments for government activities, a default on the government’s debt obligations, or both.”

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