“US Treasury's Measures to Avoid Debt Cap Run Low with Only $88 Billion Left"

The United States Treasury has been grappling with the debt limit, which was reimposed in August 2021, after a two-year suspension. Since then, the Treasury has been utilizing various measures to stay under the cap, but those options are running out. As of May 2023, the Treasury only has $88 billion left in measures to avoid hitting the debt cap.

The debt limit, also known as the debt ceiling, is a legal cap on the amount of money the government can borrow to fund its operations. The limit was first introduced in 1917 and has been raised over a hundred times since then. The current debt limit was set at $28.4 trillion in August 2021, after a two-year suspension, and the government has been using various measures to stay under it.

One of the measures that the Treasury has been using is to suspend investments in certain government funds, such as the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund. This frees up space under the debt limit by reducing the amount of outstanding debt.

Another measure that the Treasury has been utilizing is to suspend the issuance of State and Local Government Series (SLGS) securities. These are special-purpose securities that state and local governments use to invest their proceeds from municipal bond issuances. By suspending the issuance of SLGS securities, the Treasury can avoid hitting the debt limit.

However, these measures have a limited lifespan and are not a long-term solution. According to the Treasury, the measures will run out by August 2023, leaving the government with limited options to avoid breaching the debt cap.

If the government hits the debt limit, it will be unable to borrow more money, which can lead to a default on its obligations, including payments on existing debt. This could have severe consequences for the economy, including higher interest rates, a stock market crash, and a potential recession.

The government has been urging Congress to raise the debt limit to avoid such a scenario, but the decision has been met with resistance from some lawmakers. In the past, the debt limit has been used as a political tool to extract concessions from the opposing party, leading to last-minute deals that can harm the economy.

In closing, the Treasury's measures to avoid hitting the debt limit are running low, with only $88 billion left. The government needs to raise the debt limit to avoid a default on its obligations, which could have severe consequences for the economy. The debt limit should not be used as a political tool, and lawmakers should work together to ensure the government can meet its financial obligations.