The U.S. Hits the Debt Ceiling (Again): Now What?

As of today, the U.S. has borrowed as much as it legally can and will be prohibited from borrowing any more. Or, in the language of the headlines, we have hit the debt ceiling. The new Congress has failed to pass a law allowing the Treasury to borrow the money to make payments that previous Congresses have required the Treasury to make. The Treasury will therefore have to use cash on hand right now, as well as any inflows, to pay the outstanding bills for as long as it can—until the money runs out.

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