The Treasury Department will begin taking special cash-preservation measures on Monday to prevent the U.S. government from defaulting on its debt after Congress missed a key deadline to raise or suspend the borrowing limit.
The debt ceiling, which is currently around $22 trillion, is the legal limit on the total amount of debt that the federal government can borrow on behalf of the public; according to the Committee for a Responsible Federal Budget (CRFB). It applies to both the $16.2 trillion held by the public, and the $5.9 trillion owed by the government. If the debt ceiling is not raised or suspended, the U.S. government can no longer issue debt and will soon run out of cash on hand.
In 2019, former President Donald Trump suspended the nation's borrowing limit for two years, but that suspension expired on Saturday without any congressional action, forcing the Treasury Department to take what are known as "extraordinary measures" so the government can continue to pay its obligations. --->READ MORE HERE
The legal limit on how much debt the U.S. government can owe was reimposed Sunday, kicking off a high-stakes battle over federal spending with dire implications for global financial markets
A two-year deal to suspend the debt ceiling lapsed at midnight following inaction from Congress and President Biden to give the U.S. more borrowing authority. The Treasury Department will now begin taking what it refers to as “extraordinary measures” to prevent the U.S. from defaulting on its debt.
Those steps are likely to avert a default until October or even November before Biden will need to sign a bill to raise or suspend the limit again.
The expiration of the debt limit has triggered numerous partisan standoffs over the past decade, most recently in 2019. Each time, Congress has raised or suspended the debt limit. But the weeks before a potential default have often been the most tense, both for financial markets and administration officials.
“I respectfully urge Congress to protect the full faith and credit of the United States by acting as soon as possible,” Treasury Secretary Janet Yellen wrote in a letter to congressional leaders last week, warning that they risked “irreparable harm to the U.S. economy and the livelihoods of all Americans” by delaying action. --->READ MORE HEREFollow links below to related stories:
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