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Debt Limit Policy Questions: What Are the Potential Economic Effects of a Binding Federal Debt Limit?
Federal law prohibits the "face amount of obligations whose principal and interest are guaranteed by the United States Government" from exceeding the statutory debt limit (31 U.S.C. ยง3101). The Department of the Treasury has the power to take some temporary "extraordinary measures" that extend the date on which the statutory limit is reached. [..]