DOT can use extraordinary measures for only so long-until it can no longer shift funds around to stay under the debt limit while still paying the government's debts. Instead, when the United States reaches its debt limit, Congress has authorized DOT to take extraordinary measures to continue paying the debts of the United States until such time that DOT runs out of funding. Unlike when Congress fails to pass appropriations, which we have witnessed in recent years, the government does not shut down, nor do agencies need to determine which employees should continue coming to work. The consequences of the United States hitting its debt limit differ from the consequences of Congress's failure to pass its annual appropriations bill. What Happens When the United States Hits Its Debt Limit? The Biden administration has signaled that it believes the only option is to raise the debt limit, and that it is unwilling to negotiate spending cuts, or other efforts, as part of the increase.
#Standoff 2 xx update
Secretary Yellen concurred in an update to Congress on May 1, 2023, reiterating the uncertainty, but explaining that "fter reviewing recent federal tax receipts, best estimate is that will be unable to continue to satisfy all of the government's obligations by early June, and potentially as early as June 1." She further explained in an interview on that "we've been using extraordinary measures for several months now and our ability to do that is running out, and we will start to run down our cash Our current projection is that in early June a day will come when we are unable to pay our bills unless Congress raises the debt ceiling." Government months into the future." Experts have been projecting that without action from Congress, the United States could default as early as June or July of this year. In urging Congress to act in January of this year, Secretary Yellen explained that "he period of time that extraordinary measures may last is subject to considerable uncertainty, including the challenges of forecasting the payments and receipts of the U.S. The secretary explained that she expected the extraordinary measures to continue until June of 2023. House of Representatives, that the United States had reached its debt limit and would begin using extraordinary measures to avoid defaulting on the government's loans. In January 2023, Secretary of Treasury Janet Yellen notified Kevin McCarthy, speaker of the U.S. If Congress fails to increase the debt limit, it puts all of these payments in jeopardy.Ĭongress last increased the debt limit in December 2021 to just below $31.4 trillion. These financial obligations include Social Security, Medicare, payments to contractors, and interest on the national debt.
The debt limit is the congressionally set maximum that the Department of Treasury (DOT) can borrow to satisfy the government's existing financial obligations when federal revenues alone are not sufficient. government has been relying on this borrowing power to fund its financial commitments since early in the twentieth century and has not run a surplus, meaning that it has not funded its commitments without going further into debt, for over 20 years. The Constitution grants Congress the sole authority to borrow on behalf of the United States. To understand how, it's important to know how we arrived here, and how the government might or might not respond when it can no longer borrow to meet its financial obligations. In addition to causing widespread economic harm, Congress's failure to raise the debt limit, also known as the debt ceiling, could directly impact government contractors. The United States is facing yet another standoff over its congressionally set debt limit.
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