The Government Accountability Office calls on Congress to align decisions on the debt limit with spending and revenue or work with the Treasury Department to enable flexibility in federal debt and cash management.
GAO said in a July report to Congress the delay in raising the debt limit affects the market for Treasury securities and the larger financial system.
Delays cause increased rates in the secondary market and Treasury borrowing costs, GAO said.
The debt limit impasse ultimately impacts taxpayer dollars through the interest Treasury pays on the federal debt, the report noted.
GAO recommends alternative approaches to help Treasury manage cash balances and avoid disruptions in the financial sector following potential congressional action on debt limit suspensions.
According to the agency, options include linking debt limit decisions to the budget resolution and authorization for the administration to raise the debt limit and borrow funding for enacted laws.