Fact Check: "The U.S. national debt ceiling must be raised to avoid default."
What We Know
The U.S. national debt ceiling is the maximum amount of debt that the Department of the Treasury can issue to finance government operations. As of January 2, 2025, this limit was reinstated at $36.1 trillion after a suspension period that ended on January 1, 2025. The Congressional Budget Office (CBO) estimates that if the debt limit remains unchanged, the government's ability to borrow using established "extraordinary measures" will likely be exhausted by August or September 2025 (CBO). If the debt ceiling is not raised or suspended before these extraordinary measures are exhausted, the government will be unable to meet its obligations, potentially leading to a default on its debt (Debt Ceiling Explainer).
Extraordinary measures are temporary actions that the Treasury can take to create additional borrowing capacity. These measures include suspending investments in federal employee retirement funds and reducing cash balances (Debt Ceiling Explainer). However, these measures are not a long-term solution and can only delay default for a limited time.
Analysis
The claim that the U.S. national debt ceiling must be raised to avoid default is supported by multiple credible sources. The CBO's projections indicate that without an increase or suspension of the debt ceiling, the government will exhaust its borrowing capabilities, leading to a situation where it cannot fulfill its financial obligations (CBO). This situation would necessitate either delaying payments or defaulting on debt obligations, both of which would have severe economic consequences.
The historical context provided by the Debt Ceiling Explainer reinforces the idea that the debt ceiling is a mechanism for Congress to authorize borrowing for expenditures that have already been approved. The failure to raise the debt ceiling has previously resulted in credit downgrades and increased borrowing costs, as seen in 2011 and more recently in 2023 (Debt Ceiling Explainer). These events highlight the potential economic fallout from not addressing the debt ceiling in a timely manner.
Moreover, the Treasury has indicated the urgency of raising the debt ceiling to avoid catastrophic consequences, including potential job losses and economic recession (Debt Ceiling Explainer). This urgency is echoed in communications from the Treasury Secretary, who has urged Congress to act before the extraordinary measures run out (Debt Limit Letter to Congress).
Conclusion
Verdict: True
The claim that the U.S. national debt ceiling must be raised to avoid default is accurate. The evidence clearly indicates that without an increase or suspension of the debt ceiling, the government will run out of borrowing capacity, leading to a default on its obligations. This situation poses significant risks not only to the U.S. economy but also to the global financial system.
