cover image: Debt Limit Analysis - February 2023

20.500.12592/b42t2g

Debt Limit Analysis - February 2023

24 Feb 2023

The Debt Limit THE BASICS 9 • The debt limit is… …the maximum amount that Treasury is allowed to borrow; …set by statute (Congress must act to change it); and …inclusive of most debt issued, whether held by the public (such as Treasury bills and savings bonds) or intragovernmental (such as debt held by the Social Security trust funds). [...] • In recent years, the issue of the debt limit has grown increasingly political, and debt limit brinkmanship has damaged the creditworthiness of the U. [...] ISSUE NEW DEBT TO THE PUBLIC IN TRADITIONAL MANNER Debt Limit Reached EXTRAORDINARY MEASURES EM Exhausted DAILY REVENUE AND CASH ON HAND The X Date DEFAULT ON FINANCIAL OBLIGATIONS Extraordinary Measures WHAT ARE EXTRAORDINARY MEASURES? 15 • Existing statutes allow Treasury to adjust the normal operations of certain government accounts when the debt limit is reached. [...] Debt Limit New Public Cash Debt PuIbGlic Deebbtt Existing Public Debt IG Debt 20 When the debt limit is increased… New Debt Limit Old Debt Limit Public Debt PuIbGlic Deebbtt Public Debt IG Debt 21 …extraordinary measures are immediately restored. [...] Treasury securities are the underpinning of the world financial system…[and] delays in raising the debt limit can create uncertainty in the Treasury market.” THE RISKS ARE REAL 43 • Crossing the X Date would be unprecedented.

Authors

Julie Smith

Pages
50
Published in
United States of America

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