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]