CBO Releases Updated Report on the Debt Limit

Posted by
Keith Hall
October 14, 2015

In March, the ceiling on federal debt 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. CBO expects that the date on which those measures will be exhausted and the Treasury will run out of cash without a change in the debt ceiling will occur earlier than CBO had projected at the end of August.

In a report released today in response to Congressional interest, CBO now 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.

In its August report, CBO had projected that these developments would occur between mid-November and early December; the agency revised its estimate of the timing primarily because the Treasury’s cash balance at the beginning of October was smaller than expected, the result of a larger-than-expected deficit and other variations in cash flows.

Keith Hall is CBO’s Director.