Treasury Taking “Extraordinary Measures” to Avoid Default After Debt Limit Hit

Treasury Secretary Janet Yellen announced that the Treasury Department took so-called “extraordinary measures” to pay the federal government’s bills after the U.S. exceeded its debt limit.

In a letter Yellen addressed House Speaker Kevin McCarthy (R-Calif.) and stated that the Treasury would suspend all new investments in the Civil Service Retirement and Disability Fund and Postal Service Retiree Health Benefits Fund, from Thursday to June 5, 2023. She warned that both moves were subject to conditions. “considerable uncertainty” If Congress fails to pass a bill to raise the $31.4 trillion debt limit,

The Treasury secretary told lawmakers Friday She believes that the extraordinary steps taken could enable the government to meet its obligations until June. Last week, Yellen urged Congress to “act in a timely manner to increase or suspend the debt limit,” Failure to do so could result in the United States’ first ever default on its debt, and economic damage all around the globe.

On Friday, the White House urged Congress to increase the debt ceiling. “without condition.”

The Treasury secretary warned last week The U.S. government will reach the statutory debt limit on Thursday. After that, extraordinary measures will be taken to prevent the government from defaulting.

While the U.S. government is not in default on its debt, the debt ceiling has been raised According to the Government Accountability Office 22 times between 1997-2022, According to a White House senior official, the Biden administration will prioritise negotiations to raise the debt limit.

Concerns have been raised about Congress’ ability to raise the debt ceiling by June because of the concessions made by the Republican House majority. Some GOP lawmakers claim they want to cut spending in exchange for an agreement to increase borrowing limits.

Some Republican representatives have said McCarthy won the Speakership by winning support from conservatives who were able to negotiate major spending cuts for key programs like Medicare, Social Security, and Medicare.

McCarthy called for cuts in order to prevent the bankrupting of programs like Medicare or Social Security.

“You couldn’t just keep increasing it,” He spoke on Fox News Channel’s program “Fox News Sunday.” “Let’s sit down and change our behavior for the good of America. Because what we’re going to do is bankrupt this country and bankrupt these entitlements if we don’t change their behavior today.”

Other House Republicans like Chip Roy from Texas and Ralph Norman in South Carolina, demanded spending reductions before any debt limit increases.

“You only have so many leverage and negotiating points. The debt ceiling is one of those,” Roy said.

Karine Jean-Pierre, White House Press Secretary told Reporters this week: President Joe Biden It is not willing to attach conditions to negotiations on the debt ceiling.

“This is just another attempt by congressional Republicans to force unpopular cuts on programs critical to seniors, the middle class and working families. Congress needs to act and do so quickly. There is no excuse for political brinkmanship,” Jean-Pierre said Tuesday.

Senator Majority Leader Chuck Schumer (D-N.Y.), released a statement Thursday stating that American families would pay the price. “gratuitous partisan politics” Over the debt ceiling rise.

“This is not complicated: if the MAGA GOP stops paying our nation’s bills, Americans will be the ones to pay the price,” Schumer spoke. “Political brinkmanship with the debt limit would be a massive hit to local economies, American families and would be nothing less than an economic crisis at the hands of the Republicans.” 

The federal government’s maximum debt limit is the debt ceiling. Lifting it ensures the government can continue to borrow — not spend — to meet its budgeted goals.