2023 United States debt-ceiling crisis

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On January 19, 2023, the United States hit its debt ceiling, leading to a debt-ceiling crisis, part of an ongoing political debate within Congress about federal government spending and the national debt that the U.S. government accrues.[1][2] In response, Janet Yellen, the Secretary of the Treasury, began enacting temporary "extraordinary measures". On May 1, 2023, Yellen warned these measures could be exhausted as early as June 1, 2023;[3][4] this date was later pushed to June 5.[5]

The debt ceiling had been increased multiple times through December 2021 since the 2013 debt-ceiling standoff, each time without budgetary preconditions attached.[6][7] In the 2023 impasse, Republicans proposed cutting spending back to 2022 levels as a precondition to raising the debt ceiling, while Democrats insisted on a "clean bill" without preconditions, as had been the case in raising the ceiling 3 times during the Donald Trump administration.[8]

If the government had run out of funds, the Treasury would have had to either default on payments to bondholders or immediately curtail payment of funds owed to various companies and individuals that had been mandated but not fully funded by Congress. Both situations had been expected to result in a global economic meltdown.[9] Additionally, if the federal government had been unable to issue new debt, it would have had to balance its budget by imposing budget cuts that, in total, would have equaled 5% of the size of the American economy.[10] Constitutional scholar Laurence Tribe said that a default would be unconstitutional due to the 14th Amendment and the government would be required to repay its debts despite hitting the debt ceiling.[11][12] President Joe Biden said that he was considering invoking the 14th amendment because he felt he had authority to do so, but questioned whether it could be done in time to avoid default given the possibility that it might be appealed.[13]

On May 27, Biden and then-House speaker Kevin McCarthy struck a deal to increase the debt-ceiling but cap federal spending;[14] the resulting bill, the Fiscal Responsibility Act of 2023, passed the House on May 31 and the Senate on June 1.[15] Biden signed it into law on June 3, bringing the crisis to an end.[16]

  1. ^ "What's the Debt Ceiling, and Will the US Raise It?". Bloomberg.com. January 13, 2023. Retrieved January 22, 2023.
  2. ^ "US hits debt ceiling, prompting Treasury to take extraordinary measures". NBC Palm Springs. January 19, 2023. Archived from the original on January 22, 2023. Retrieved January 22, 2023.
  3. ^ "The U.S. Could hit the debt ceiling by June 1, much sooner than expected, Yellen warns". CNBC. May 2023. Archived from the original on May 1, 2023. Retrieved May 1, 2023.
  4. ^ "US may default on debt as soon as June 1, Yellen reaffirms". CNN. May 15, 2023. Archived from the original on May 17, 2023. Retrieved May 17, 2023.
  5. ^ Rappeport, Alan (May 26, 2023). "Yellen Expects U.S. to Run Out of Cash by June 5 as Debt Talks Continue". The New York Times. Archived from the original on May 26, 2023. Retrieved May 26, 2023.
  6. ^ Cite error: The named reference :3 was invoked but never defined (see the help page).
  7. ^ Croce, Brian (January 18, 2023). "Debt ceiling debate explained amid global economic uncertainty". Pensions & Investments. Archived from the original on January 18, 2023. Retrieved January 19, 2023.
  8. ^ Jayshi, Damakant (May 3, 2023). "Did GOP Vote To Raise Debt Ceiling 3 Times with No Preconditions During Trump Era?". Snopes. Archived from the original on May 6, 2023. Retrieved May 6, 2023.
  9. ^ "Debt ceiling: America's budget crisis of its own creation". BBC News. January 20, 2023. Archived from the original on January 20, 2023. Retrieved January 20, 2023.
  10. ^ "US Treasury buys time for Biden and GOP on debt limit deal". Associated Press. January 19, 2023. Archived from the original on January 22, 2023. Retrieved January 22, 2023.
  11. ^ Writer, Christina Pazzanese Harvard Staff (May 15, 2023). "Laurence Tribe explains how 14th Amendment can help Biden avoid default". Harvard Gazette. Archived from the original on May 31, 2023. Retrieved May 31, 2023.
  12. ^ Swan, Betsy Woodruff (May 14, 2023). "How the Supreme Court might view the debt limit fight". POLITICO. Archived from the original on May 31, 2023. Retrieved May 31, 2023.
  13. ^ House, The White (May 21, 2023). "Remarks by President Biden in a Press Conference". The White House. Archived from the original on May 31, 2023. Retrieved May 31, 2023.
  14. ^ Tankersley, Jim; Edmondson, Catie; Broadwater, Luke (May 27, 2023). "White House and G.O.P. Strike Debt Limit Deal to Avert Default". The New York Times. Archived from the original on May 28, 2023. Retrieved May 27, 2023.
  15. ^ Yilek, Caitlyn (June 1, 2023). "Senate passes debt ceiling bill, sending measure to Biden to avert default". CBS News. Archived from the original on June 2, 2023. Retrieved June 1, 2023.
  16. ^ "Biden signs debt ceiling bill that pulls US back from brink of unprecedented default". Associated Press. June 3, 2023. Archived from the original on June 3, 2023. Retrieved June 3, 2023.