Excerpt: “Congress sets a limit on federal borrowing, known as the debt limit. If the government reaches this limit and exhausts available cash, it risks missing payments on its debt, thereby defaulting. A default could have devastating effects on financial markets, the economy, and the United States’ stature abroad. Federal spending and revenue decisions are made separately from decisions on the debt limit. This can create borrowing needs that exceed the limit. We recommended Congress consider immediately replacing the debt limit process with one that requires decisions on debt to be made at the same time as decisions on spending and revenue.”
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