A newly released 2021 Justice Department legal opinion holds that the Treasury Department has wiggle room to maintain higher cash balances ahead of the statutory debt limit’s reinstatement, a potentially significant development as Congress prepares for another battle over the nation’s borrowing cap next year.
The opinion, which Justice’s Office of Legal Counsel quietly posted on its website Friday, appears to give Treasury some leeway to maintain a cash balance in keeping with what it believes the government’s immediate financing needs are, or at least close to it.
That’s contrary to past debt ceiling episodes when similar statutory language was in effect barring creation of an excess cash buffer “above normal operating balances in anticipation” of the end of a debt limit suspension period. In those instances, it appeared Treasury officials interpreted the language to require a drastic rundown of that emergency cash balance.
