With the Debt Limit Constraint, How Much Does Treasury Have to Continue Funding Government Operations?

Last night, Hal Turner reported that the US Treasury has just $200 billion left to fund operations. I have not yet confirmed, but if true Congress will soon need to the expand debt limit or government will not be able to meet its obligations https://halturnerradioshow.com/index.php/en/news-page/news-nation/u-s-treasury-cash-on-hand-drops-below-200-billion-debt-ceiling.

And how does Treasury continue funding government operations when government hits a debt ceiling? It takes “extraordinary measures.” To learn more about these extraordinary measures, click here: https://doi.org/10.1017/S1474747223000057

The article “Explaining fluctuations in the Thrift Savings Fund daily balance at U.S. treasury” (Mark Skidmore, Camila Alvayay Torrejón, David Pare) was published today in Pension Economics and Finance. The article examines the G-Fund, which is one of the five funds in the federal government employee retirement Thrift Savings Plan (TSP). The G-Fund is held as internal debt by the U.S. Department of Treasury. The examination shows that the $250+ billion fund balance is exclusively composed of 1-day notes that are redeemed/reissued every business day, generating $55 trillion in annual debt reissuance. The analysis also demonstrates that the fund balance drops substantially as resources are transferred to the general fund when the government is constrained by a debt ceiling and returns to pre-constraint levels when the ceiling is expanded/suspended.

It appears that TSP contributors are carrying the water during debt constraint periods, but are not fully informed of how their funds are managed.

Published by markskidmore

Mark Skidmore is Professor of Economics at Michigan State University where he holds the Morris Chair in State and Local Government Finance and Policy. His research focuses on topics in public finance, regional economics, and the economics of natural disasters. Mark created the Lighthouse Economics website and blog to share economic research and information relevant for navigating tumultuous times.

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