Fiscal impact of the debt ceiling

Finance


One of the fundamentals of finance is that U.S. government securities represent a “risk-free” rate of return, but unless Congress and the White House come out with a deal to raise the debt ceiling, we could expect a historic default by June. may head to 1, according to Treasury Secretary Janet Yellen (opens in new tab)If so, what impact can you expect on your own finances?

First, what is the debt ceiling? Federal law limits the amount of government bonds that the U.S. Treasury Department can issue in the form of securities such as Treasury bills, bonds, and bills. Once the debt ceiling or debt ceiling is reached, the U.S. government cannot borrow any more until Congress raises the ceiling. This means that, under current rules, there will soon be insufficient cash for future interest payments on existing debt.





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