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, the debt ceiling was reached, and the Secretary of the Treasury announced a “debt issuance suspension period.” During such a period, existing statutes allow the Treasury to take a number of “extraordinary measures” to borrow additional funds without breaching the debt ceiling. The Congressional Budget Office projects that if the debt limit remains unchanged, those measures will be exhausted and the Treasury will run out of cash between mid-November and early December. 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.
Federal Debt and the Statutory Limit, August 2015
CBO projects that if the debt limit is unchanged, the measures that the Treasury has been taking to avoid breaching that limit will be exhausted sometime between mid-November and early December, and the Treasury will then run out of cash.