What That Means For The Economy | Global News Avenue

A key deadline for government borrowing limits has passed, but lawmakers may not be able to take up the issue until the summer.

The U.S. debt ceiling came back into effect on Thursday, resetting the limit on how much the government can borrow set by Congress. limit has been suspended In 2023, there’s bargaining going on between President Joe Biden and Republican lawmakers. However, at least one analysis suggests the borrowing restrictions are unlikely to significantly impact the nation’s finances or economy in the coming months.

government Exceeding borrowing limit There could be serious economic consequences. If the government can no longer borrow money, officials will have to Pick What obligations it will fulfill with the revenue it generates. For example, lawmakers must choose between paying interest on the national debt or sending checks to Social Security recipients.

These options may triggering global financial crisis and put the economy into trouble. In recent years, legislators have Use debt limit violation Used as a negotiating tool to win concessions from opponents in exchange for keeping the country from plunging over a financial cliff.

The government has some leeway

Although the debt ceiling is now back in effect, it could be days before the United States reaches the debt levels set by Congress, and months before Congress is forced to act to extend the ceiling.

By law, the new limit is set at the current level of the national debt, which is about $36 trillion. Debt generally rises over time as government spending deficits reach a ceiling sooner or later.

However, Treasury Secretary Janet Yellen explained in a letter to Congress last week that pre-planning the sale of some securities held by the government gives the government several days of leeway, with the cap expected to be set in January Reached sometime between the 14th and 20th. twenty three.

The real deadline is this summer

After that, the Treasury can use an accounting trick called “extraordinary measures” to temporarily get the government to pay its bills. Bernard Yaros, chief U.S. economist at Oxford Economics, wrote in a commentary this week that the measures are likely to continue into the summer.

At that time, it will be up to President Trump and Congress to decide whether to raise or suspend the debt ceiling.

While Republicans will control the Senate and House of Representatives, their majorities remain slim and a handful of dissidents could derail any plans to extend the cap. last month, Lawmakers reject Trump-backed plan to extend the debt ceiling for two years.