About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 Federal Debt and the Statutory Limit, January 2018 1 (January 31, 2018)

handle is hein.congrec/fedbstim0001 and id is 1 raw text is: JANUARY 2018 Federal Debt and the Statutory Limit, January 2018 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 fed- eral agencies. The amount is set by law and has been increased over the years to finance the government's operations. The limit was suspended on September 8, 2017. On December 8, 2017, that suspension expired, and the Secretary of the Treasury announced a debt issuance suspension period during which existing statutes allow the Treasury to take extraordinary mea- sures to borrow additional funds without breaching the debt ceiling. The Congressional Budget Office projects that if the debt limit remains unchanged, the ability to borrow using extraordinary measures will be exhausted and the Treasury will most likely run out of cash in the first half of March 2018. If that occurred, the government would be unable to pay its obligations fully, and it would delay making payments for its activities, default on its debt obligations, or both. (The timing and size of revenue collections and of outlays over the next few weeks could differ noticeably from CBO's projections, however, so the extraordinary measures could be exhausted and the Treasury could run out of cash either earlier or later than CBO projects.) CBO previously projected that the extraordinary mea- sures would be exhausted and the Treasury would run out of cash sometime in late March or early April 2018.1 After incorporating the anticipated effects of recent tax legislation and actual spending and revenue amounts in December into its calculations, CBO now projects the range of possible dates as falling earlier in March. 1. See Congressional Budget Office, Federal Debt and the Statutory Limit, November 2017 (November 2017), www.cbo.gov/ publication/53336. Because the tax legislation reduced individual income taxes for most taxpayers, the Internal Revenue Service released new income tax withholding tables for employers to use beginning no later than the middle of February 2018. As a result of those changes, CBO now estimates that, starting in February, withheld amounts of individual income taxes will be roughly $10 billion to $15 billion per month less than anticipated before the new law was enacted. Consequently, withheld receipts are expected to be less than the amounts paid in the comparable period last year. In addition, the government ran a deficit of $23 billion in December, and it normally runs a deficit in the second quarter of the fiscal year. What Is the Current Situation? The Continuing Appropriations Act, 2018 and Supplemental Appropriations for Disaster Relief Requirements Act, 2017 (Public Law 115-56), specified that the amount of borrowing that occurred during the suspension of the debt limit would be added to the previous ceiling of $19.8 trillion. On December 9, 2017, the debt limit was reset to $20.5 trillion to match the amount of outstanding debt. Because P.L. 115-56 did not provide any additional borrowing authority, under its standard operating pro- cedures, the Treasury currently has no room to borrow other than to replace maturing debt. To avoid breaching the limit, the Treasury uses the extraordinary measures that allow it to continue to borrow additional amounts for a limited time. Continued use of those measures, along with regular cash inflows over the next few months, should allow the Treasury to finance the govern- ment's activities for a few weeks without an increase in the debt ceiling. Note: Unless otherwise indicated, all years referred to are federal fiscal years, which run from October 1 to September 30 and are designated by the calendar year in which they end. Numbers may not sum to totals because of rounding.

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most