US Could Soon Hit $31.4 Trillion Debt Limit – By Yuval Rosenberg and Michael Rainey (The Fiscal Times) / Jan 11, 2023
Happy Wednesday! Here’s what we’re watching while waiting for Thursday morning’s inflation report.
US Could Soon Hit $31.4 Trillion Debt Limit
The U.S. could hit its self-imposed $31.4 trillion debt limit in a matter of days or weeks, the Associated Press’s Josh Boak and Fatima Hussein report Wednesday, setting up what is could be a high-stakes clash between Republicans and Democrats later this year.
Any such crisis won’t hit immediately. Once the nation’s borrowing authority is reached, the Treasury Department will resort to what it calls “extraordinary measures” to continue meeting the federal government’s financial obligations, as it has done in the past. Those measures include delaying some payments, such as contributions to federal employees’ retirement plans, in order to provide some headroom to make other payments that are deemed essential, including those for Social Security and debt instruments. (The Treasury discusses its options in this 2021 document.)
Eventually, though, the Treasury will run out of options and be unable to meet all of its obligations. That threshold, the so-called “X-date,” could arrive sometime this summer, though much depends on spending levels and tax revenues over the next few months.
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