To avoid the US Treasury running out of cash later this year, Congress has to raise or suspend the federal debt limit. There are options that bypass Congress. All have drawbacks, though advocates argue they’d be vastly preferable to defaulting on US Treasuries.
Some have been deemed gimmicks, some are potentially illegal. And none appears compatible with being the issuer of the world’s benchmark risk-free asset. Still, the deep divide between Republicans and Democrats in Washington over raising the $31.4 trillion debt ceiling has sparked discussion about what the Department of the Treasury could do to keep making payments on federal obligations if it runs out of funding space. Wall Street analysts expect the issue to come to a head sometime after June.
