January 18, 2023
- The federal government has once again reached its debt limit. Over the next several months, Congress and the President will need to come to an agreement on raising the limit as to avoid a devastating default.
- The debt ceiling is a self-imposed legal limit on the amount of debt that can be issued by the federal government.
- Since 1990, the debt ceiling has been raised or suspended a total of 21 times, according to the Treasury Department.
- Given its importance, financial markets could experience a growing sense of concern (i.e., incremental volatility) until this issue is resolved.
The federal government is once again at its self-imposed debt limit. On Friday, January 13th, Treasury Secretary Janet Yellen sent a letter to Congress stating that the federal government’s statutory debt limit would likely be reached on Thursday, January 19th. After that time, the Treasury Department would once again employ “extraordinary measures” to keep the government’s bills paid until new legislation is enacted to raise the limit.
Currently, the limit as to how much government debt can be issued by the Treasury Department to finance government operations and programs is $31.4 trillion (as set by Congress in December 2021). As of Friday, Jan. 13th, government debt subject to the limit had reached $31.3 trillion, according to Treasury. In her letter to House Speaker McCarthy, the Treasury Secretary estimated that the use of extraordinary measures would enable the Treasury Department to manage the government’s obligations through at least early June.
Read the full report.