Congress set to hit its debt ceiling this month

The federal government was on track Wednesday to run into its $31.4 trillion debt ceiling sometime in late January. That will likely lead Republicans and Democrats to a showdown on how to handle future spending. House Speaker Kevin McCarthy said his fellow Republicans will not agree to raise the amount of debt the government is allowed to take on unless they obtain unspecified spending cuts.

What happens if the government runs into its debt ceiling? The Treasury Department can immediately resort to so-called “extraordinary measures” to keep the government running, but those measures would likely burn themselves out by summer. If they do, the government could risk defaulting on its national debt, which would deal a significant blow to its financial credibility. Republicans and Democrats could prevent that by negotiating a compromise on how to regulate future spending.

Dig deeper: Read Jerry Bowyer’s column in WORLD Opinions about investors’ no-confidence vote in the U.S. economy in 2023.