Federal Debt and the Statutory Limit, September 2021
Report
CBO projects that, if the debt limit remains unchanged, the Treasury’s ability to borrow using extraordinary measures will be exhausted, and it will most likely run out of cash near the end of October or the beginning of November.
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. The Bipartisan Budget Act of 2019 (Public Law 116-37) suspended that limit until July 31, 2021. On August 1, the debt limit was reset to $28.4 trillion; on the following day, the Treasury announced a “debt issuance suspension period” during which, under current law, it may take “extraordinary measures” to borrow additional funds without breaching the debt ceiling.
The Congressional Budget Office projects that, if the debt limit remains unchanged, the Treasury’s ability to borrow using extraordinary measures will be exhausted, and it will most likely run out of cash near the end of October or the beginning of November, consistent with CBO’s prior estimate. If that occurred, the government would be unable to pay its obligations fully, and it would delay making payments for some activities, default on its debt obligations, or both.
The timing and amount of revenue collections and outlays over the next few weeks are especially uncertain, given the magnitude of outlays related to the 2020–2021 coronavirus pandemic and for disaster relief, and could differ from CBO’s projections. Therefore, the extraordinary measures could be exhausted and the Treasury could run out of cash earlier or later than CBO projects.
