The ceiling prescribes limits on the government’s outstanding debt, which we are fast on track to shatter.
UPDATE: Following passage in the lower chamber, Senate Majority Leader Chuck Schumer, D-N.Y., said he rejected the House-passed bill to raise the debt ceiling and trim federal spending. Check back here for the latest as NSBA continues tracking this important matter.
Last week, House Republicans released a draft bill to address the federal debt ceiling, which is the limit imposed by Congress on the amount of debt the U.S. federal government can have outstanding.
In 2021, Congress raised this limit to $31.4 trillion; however, this threshold is expected to be exceeded this summer, putting the U.S. federal government at risk for default.
Under the House majority’s cursory plan, the federal debt ceiling would be raised by $1.5 trillion or until the end of next March, whichever occurs first.
Congressional leaders are also working to ensure any raises in the debt ceiling are paired with spending cuts; the current draft bill would reduce discretionary spending by $130 billion for FY 2024, limiting future increases further to one percent a year for the next 10.
According to the Congressional Budget Office, which exercises fiscal oversight over congressional legislation, the bill would save $4.8 trillion through FY 2033, with about $4.3 trillion of policy savings and $545 billion of interest savings.
Absent Congressional action, the Treasury Department has been using “extraordinary measures,” such as delaying investments of certain federal retirement funds, since Jan. 19 to stay below the cap. However, Treasury Secretary Janet Yellen said these tools will likely be exhausted by early June.
NSBA will continue to monitor activity on the Hill and advocate to ensure small business remains at the forefront of any federal financial decisions. Read more, including details on this debt ceiling proposal, here.