Debt Ceiling 2023
The United States government is on the brink of a debt crisis that could have significant consequences for its ability to pay its obligations fully. The Congressional Budget Office (CBO) has warned that the government is expected to exhaust its “extraordinary measures” to pay off debt sometime between July and September and that the projected exhaustion date is uncertain.
The CBO director, Phillip Swagel, has called for changes in fiscal policy in the long term to address the issue. However, the U.S. hit its debt ceiling on Jan. 19, and Treasury Secretary Janet Yellen has notified Congress of the need for “extraordinary measures” to be implemented, such as the suspension of new investments in retirement funds until June 5, 2023.
In Dec. 2021, the debt limit was raised to approximately $31.381 trillion, but a Republican-led Congress following the midterm elections is now seeking spending cuts in exchange for support in raising the debt ceiling, which most Democrats are against.
If the debt limit is not raised, the Treasury would not be authorized to issue additional debt other than to replace maturing securities, which would lead to delayed payments for some government activities, a default on the government’s debt obligations, or both. The CBO warns that this would have significant consequences, with many Americans potentially losing their jobs, household payments on mortgages, auto loans, and credit cards rising, and American businesses seeing credit markets deteriorate.
The warning from the CBO and Yellen’s assessment of the consequences of a failure to raise the debt ceiling underscores the urgent need for action to address the debt crisis. The long-term implications of a default on the debt could be dire, and lawmakers must work together to find a solution to avoid a potential economic and financial catastrophe. It is time for Congress to prioritize the country’s financial stability and address the issue before it is too late.