The debt limit—commonly called the debt ceiling—is the maximum amount of debt that the Department of the Treasury can issue to the public or to other federal agencies. The amount is set by law and has been increased over the years to finance the government’s operations. Currently, there is no statutory limit on the issuance of new federal debt because the Continuing Appropriations Act, 2018 and Supplemental Appropriations for Disaster Relief Requirements Act, 2017 (Public Law 115-56), enacted in September 2017, suspended the limit through December 8, 2017. On December 9, 2017, however, the limit will be reset to reflect cumulative borrowing through the period of suspension. Unless additional legislation either extends the suspension or increases the limit, existing statutes then will allow the Treasury to declare a “debt issuance suspension period” and to take “extraordinary measures” to borrow additional funds without breaching the debt ceiling.
CBO projects that if the debt limit remains unchanged, the ability to borrow using extraordinary measures will be exhausted and the Treasury will most likely run out of cash by late March or early April 2018. If that occurred, the government would be unable to pay its obligations fully, and it would delay making payments for its activities, default on its debt obligations, or both. (The timing and size of revenue collections and of outlays over the next few months could differ noticeably from CBO’s projections, however, so the extraordinary measures could be exhausted and the Treasury could run out of cash either earlier or later than CBO projects.)