*Y-axis in billions. Figures as of Friday, June 02, 2023
This chart depicts an approximation of how much funding the Federal government has left before reaching a conflict with the Federal debt statutory limit, currently set at $31.4 trillion. The US government will not be able to issue more debt securities in excess of this amount.
The debt ceiling is the maximum amount of debt that the Treasury is allowed to issue by law. It is periodically raised by Congress, but sometimes a divided Congress can stall the process by using an increase in the debt ceiling as a bargaining tool in policy negotiations. If the negotiations fail to achieve a resolution in a timely manner, it is possible that the Treasury will run out of room to issue more debt and will fall short on its ability to fund obligations for interest payments, debt maturities, and fiscal spending.
The Treasury General Account (TGA) is the U.S. government’s operating account that is maintained by designated depositaries, primarily Federal Reserve Banks and their branches, to handle daily public money transactions. These transactions include deposits of taxes, customs duties, public debt receipts, proceeds from the sale of securities, and disbursements of U.S. Government payments.1 In simplified terms, it can be thought of as the cash balance available to the Federal government, similar to the cash balance of a checking account. When it comes to spending available, the TGA is an asset that offsets the ceiling on debt.
If debt ceiling can be thought of as a credit limit, and the TGA a cash balance, then the amount of liquid funding the Federal government has immediately available before a debt ceiling conflict could be approximated with the following formula:
This funding wiggle room which takes into account the TGA is represented in the chart above by the space between the green line (total debt - TGA) and the red line (the debt ceiling).
i.e. When the debt ceiling is reached, the Treasury cannot issue further T-Bills, Notes, and Bonds.
However, note that the debt ceiling is a cap on the total amount of debt that can be accumulated by the US government. Every day billions of dollars in Treasuries reach maturity, which lowers the total amount of debt and makes some room for new debt issuance within the total debt limit. Such new issuance can be used to pay off the principal of the maturing debt, rolling it forward.
There were several times during the last decade when a settlement on negotiations could not be reached, so Congress instituted a temporary suspension of the debt limit. In the chart above, the red line representing the debt ceiling is absent for those periods when it was suspended.
The chart above also does not reflect the direct impact of the Treasury's Extraordinary Measures, a series of temporary accounting maneuvers that can be used to postpone a debt ceiling conflict.