Treasury Bills and Bonds
Borrowing by the Treasury is done through the issuance of shorter-term notes, called bills, and longer-term bonds. The bonds have a maturity of as long as 30 years.12
TreasuryDirect. “About Treasury Marketable Securities.” Treasury bonds are backed by the full faith and credit of the U.S. government, and as such are popular investments by governments, companies, and individuals worldwide.13
What Is a Statutory Debt Limit?
This limit, set by Congress, is the ceiling for how much debt that the U.S. government can take on. It includes interest payments on existing debt. Once the government reaches the statutory debt limit, it cannot take on new obligations.
What Happens When the U.S. Hits the Debt Limit?
If the U.S. hits the debt limit, it risks a default. Defaulting on its debts could lower the country’s credit rating, shake consumer confidence, drag down the stock market, and tip the U.S. economy into a recession.10