US hits debt ceiling, prompts Treasury to take extraordinary measures

CNN
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America attacked Loan ceiling Set up by Congress on Thursday, the Treasury Department forced the government to begin taking extraordinary measures to pay its bills and increased pressure on Capitol Hill to avoid a catastrophic default.

The battle lines for the high-profile fight have already been drawn. Hard-line Republicans, who overwhelmingly dominate the House because of the party’s slim majority, Raising the borrowing cap is linked to spending cuts. The White House has said it will not make any concessions or negotiate on raising the debt ceiling. With the solution to the debt ceiling drama squarely in the hands of lawmakers, fears are growing that partisan gerrymandering could result in the nation defaulting on the debt for the first time — or come dangerously close to doing so.

Treasury Secretary Janet Yellen wrote a letter to House Speaker Kevin McCarthy on Thursday, informing him that the nation’s outstanding debt is below its statutory limit of $31.4 trillion. Enormous consequences for the US economy, global financial stability, and many Americans. These measures will expire on June 5, he said.

That buys Congress some time — but for how long Extraordinary actions Lasting is subject to “considerable uncertainty,” he wrote, stressing that it’s a challenge to predict how much the federal government will have to pay its fiscal obligations and how much revenue it will take in in future months.

“I respectfully urge the Congress to act immediately to preserve the full faith and credit of the United States,” he wrote.

Notification is as follows warning Yellen sent out last week a temporary band-aid on the looming debt ceiling and extraordinary measures.

But his note has so far failed to spark a bipartisan debate. Instead, Republicans and Democrats have reaffirmed their firm stance over the past week.

National Economic Council Director Brian Deiss repeatedly called on Congress Thursday to meet America’s obligations by raising the debt ceiling, warning against “economic chaos” if Congress fails to do so.

“It’s about economic stability and economic chaos,” Deese told Kaitlan Collins on “CNN This Morning,” calling it a “fundamental, fundamental duty” of Congress.

He added, “Even the fear that the U.S. is not honoring its obligations is damaging to the economy.”

McCarthy must walk a fine line since any member can call for a motion to vacate the Speaker’s chair, one of the many concessions he made to gain the top job. After 15 rounds of voting Earlier this month.

For now, he wants to use the debt ceiling crisis to cut spending and balance the U.S. budget. On Tuesday, McCarthy rejected Democratic calls for a clean debt ceiling increase without conditions — something Congress has repeatedly done, including then-President Donald Trump. The spokesman told reporters on Capitol Hill that the Biden administration should begin negotiating before this summer.

“Why don’t we sit down and change this behavior so that we are in a stronger position financially?” McCarthy said.

President Joe Biden and McCarthy had yet to talk about the debt ceiling on Thursday, according to an official familiar with the dynamic.

Right-wing GOP Rep. Andy Biggs He went further in a tweet on Tuesday, saying, “We can’t raise the debt ceiling. Democrats have recklessly spent our taxpayer money and devalued our currency. They made their bed, so they have to lie in it.”

The White House on Wednesday blasted the Arizona Republican’s “incredible and unacceptable position” and again rejected calls to cut spending as part of a debt ceiling deal.

While there are no meetings with congressional leadership to announce at this time, White House spokeswoman Karine Jean-Pierre told reporters that the administration is reaching out to “all members, on both sides of the aisle,” but added, “That’s not going to happen. There has to be any negotiation on the debt ceiling — we’re not going to do that.” It is their constitutional duty.

The debt ceiling, the maximum amount the federal government can borrow for obligations already approved by lawmakers and the president, was last raised in December 2021. Created over a century ago, it has become a way for Congress to exercise control. The growth of borrowing – changing it A political football In recent decades.

Increasing the limit does not authorize new spending obligations.

Yellen wrote on Thursday that the Treasury will begin using two extraordinary measures to temporarily continue funding the federal government’s operations. They are essentially behind-the-scenes accounting maneuvers.

As part of the lending moratorium, the agency will begin selling existing investments and suspended reinvestments of the Civil Service Pension and Disability Fund and the Postal Service Retirees’ Health Benefits Fund. Also, it would freeze the reinvestment of government bond funds of the Federal Employees Retirement System’s Thrift Savings Program.

These funds are invested in special-issue treasury bonds that count against the credit limit. The Treasury’s actions will limit the amount of outstanding debt and temporarily allow the government to pay its bills on time and in full.

Yellen wrote that no federal retirees or employees would be affected, and funding would be complete once the impasse ends.

As part of his concessions, McCarthy promised to pass by the end of March a plan that would tell the Treasury which payments should be prioritized if the debt ceiling is breached, GOP Rep. Chip Roy confirmed to CNN last week.

Roy, a Texas Republican who has been one of the key players in McCarthy’s spat over free speech, noted that different versions of the payments priority plan are circulating within the House GOP and cautioned that the contours of the proposal are still being worked out.

But choosing to impose one duty over the other can trigger legal challenges, political and ethical issues. For example, lawmakers must decide what to pay first — Social Security monthly payments to millions of senior citizens and disabled Americans, salaries of federal employees and the military, or interest on the U.S. debt to many investors, among others. Foreign among them.