End the Federal Debt Ceiling: TBAC's Bold Proposal

The U.S. Treasury Borrowing Advisory Committee (TBAC) suggests removing the federal debt ceiling, claiming it increases costs, market volatility, and risks the dollar's reserve status. TBAC proposes Congress grant the administration authority to borrow necessary funds.

The U.S. Treasury's main dealers have called for the elimination of the federal debt ceiling, attributing it to increased debt service costs and heightened market volatility, which may jeopardize the dollar's status as a reserve asset, according to recent minutes from the Treasury Borrowing Advisory Committee (TBAC).

The TBAC noted that their preferred approach would involve Congress delegating broad borrowing powers to the administration, allowing it to fund governmental obligations without the constraints associated with the current debt ceiling.

This suggestion was highlighted in the minutes from a quarterly refunding meeting, held on Tuesday, indicating a significant potential shift in how the U.S. could manage its fiscal responsibilities.

(With inputs from agencies.)