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Illustration: Aïda Amer/Axios

It was bliss while it lasted — which was exactly two years. Right now, the U.S. has no limit on the amount of debt it can issue. But that ends on Saturday.

Why it matters: Brace yourself for another round of unedifying posturing and brinkmanship, all of which should result — after a period of entirely unnecessary fiscal contortion — in the debt ceiling being raised (not abolished) sometime this fall.

The big picture: The debt ceiling cannot do what it purports to do, which is control the amount that the government borrows. The tax and spending bills passed by Congress are legally binding, and the debt ceiling neither enables nor constrains them.

  • When Treasury needs to borrow money in order to follow the law of the land, it has no choice but to raise the debt ceiling. The alternative — default — is unthinkable.

Where it stands: Under the terms of the Bipartisan Budget Act of 2019, the debt ceiling comes back into force on August 1, at exactly the level of the national debt. It has to be raised, but Republican leadership is on the record saying that they will not vote for such a thing.

What they're saying: Treasury Secretary Janet Yellen, in a letter to Congress last week, urged members to "protect the full faith and credit of the United States by acting as soon as possible."

  • Don't hold your breath. Congress is focused on the infrastructure bill right now. So far, no one's started seriously grappling with the debt ceiling, partly because Treasury is still sitting on about $450 billion in cash.
  • Treasury will use "extraordinary measures in order to prevent the United States from defaulting on its obligations," says Yellen in her letter — but given the uncertainty engendered by the pandemic, no one knows how long those measures might last.
  • The best estimate of a "drop dead date," from the Bipartisan Policy Center, is early November, but no one wants this saga to drag on that long.

What's next: Congress is about to enter recess until September, and while it might return in August for the sake of an infrastructure bill, no one's expecting movement on the debt ceiling until October.

  • The most likely scenario, per Axios' Alayna Treene, is that Congress simply kicks the can down the road for a couple of months before doing a bigger debt-ceiling raise around Christmas.

The bottom line: No other country has an entirely artificial debt ceiling causing regular and predictable political agita. While every Treasury Secretary would dearly love for this archaic annoyance to simply be abolished, Congress invariably insists on keeping it alive, mostly so that its members can continue to score cheap political points off each other.

Go deeper

Sep 22, 2021 - Politics & Policy

The Democrats' debt dilemma

Illustration: Aïda Amer/Axios

Democrats find themselves in a political and potentially catastrophic economic quagmire as Republicans stand firm on denying them any help in raising the federal debt ceiling.

Why it matters: The Democrats are technically right — the debt comes, in part, from past spending by President Trump and his predecessors, not only President Biden's new big-ticket programs. But Senate Minority Leader Mitch McConnell (R-Ky.) is saddling them with the public relations challenge of making that distinction during next year's crucial midterms.

Felix Salmon, author of Capital
Sep 22, 2021 - Economy & Business

The Treasury Department's lucrative revolving door

Illustration: Sarah Grillo/Axios

A lot of government agencies can propel their public-sector employees into high-paying private-sector gigs. Sitting squarely at the top of the list is the Treasury Department.

Why it matters: Treasury has almost unlimited financial power.

4 mins ago - Health

Other drug companies want to help make the vaccines

Illustration: Megan Robinson/Axios

Generic drug companies have asked Pfizer, Moderna and Johnson & Johnson to license their COVID-19 vaccine technology to help increase global production, but so far the vaccine makers have given them the cold shoulder.

Why it matters: Other companies are saying they have extra capacity to make more vaccines. Not using that extra capacity could prolong the pandemic throughout the world.

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