On September 30, 2021, Congress averted a potential federal government shutdown by passing a last-minute bill to fund government operations through December 3, 2021.1 Two weeks later, another measure raised the debt ceiling by just enough to sustain federal borrowing until about the same date.2 Although these bills provided temporary relief, they did not resolve the fundamental issues, and Congress will have to act again by December 3.
Spending vs. Borrowing
The budget and the debt ceiling are often considered together by Congress, but they are separate fiscal issues. The budget authorizes future spending, while the debt ceiling is a statutory limit on federal borrowing necessary to fund already authorized spending. Thus, increasing the debt ceiling does not increase government spending. But it does allow borrowing to meet increased spending authorized by Congress.
The underlying fact in this relationship between the budget and the debt ceiling is that the U.S. government runs on a deficit, and has done so every year since 2002.3 The U.S. Treasury funds the deficit by borrowing through securities such as Treasury notes, bills, and bonds. When the debt ceiling is reached, the Treasury can no longer issue securities that would put the government above the limit.
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posted in budget
On September 30, 2021, Congress averted a potential federal government shutdown by passing a continuing resolution to provide funding for government operations through December 3, 2021.[1] This was only a temporary measure, and lawmakers will continue to wrestle with the budget for fiscal year 2022, as well as the debt ceiling, which requires action by mid-October.
Both of these issues have become increasingly contentious over the past decade, and they are made especially difficult this year due to simultaneous negotiations on two large spending initiatives, the roughly $1 trillion infrastructure bill, which has bipartisan support, and the $3.5 trillion budget package funding education, climate initiatives, and health care, which is split along party lines.
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