Treasury’s Cash Balance and the August 1, 2021 Debt Limit

The Bipartisan Budget Act of 2019 suspended the debt limit through July 31, 2021. Starting August 1, 2021, that Act will raise the debt limit by an amount equal to certain new debt issued since passage of the Act. New debt counts toward the forthcoming debt limit only if it “was necessary to fund a commitment incurred pursuant to law by the Federal Government that required payment before August 1, 2021.” This provision does not prevent the Department of the Treasury from applying to the forthcoming debt limit the debt it plans to issue to provide a prudential buffer of funds raised for pre-August 1 expenses, even if some or all of that buffer remains unspent at the end of the debt-limit suspension.