US Slated to Hit Debt Ceiling Amid Biden-Republican Deadlock
The US Capitol in Washington, DC, on February 8, 2022
InternationalIndiaAfricaWASHINGTON (Sputnik) – The United States is expected to reach its debt limit on Thursday, which could potentially force the federal government into default, something the Treasury has vowed to prevent even if it means taking drastic measures. The issue of lifting the debt limit has become a yearly political fight between the party in power and its rivals. The White House has called on Congress to raise the debt limit, but House Republicans refuse to do so unless the Biden administration agrees to budget cuts. In December of 2021, Congress increased the statutory debt limit to about $31.4 trillion. According to the Treasury Department, Congress has acted 78 times to raise, extend or revise the debt limit, which was changed 49 times under Republican presidents and 29 times under Democratic administrations. If Congress fails to raise the debt limit, the US would automatically default on its payments. White House Press Secretary Karine Jean-Pierre said Republicans should understand it is their constitutional responsibility to raise the debt limit and is something that should happen without any conditions. “They’re threatening to kill millions of jobs and 401(k) plans by trying to hold the debt limit hostage unless they can, again, cut Social Security, cut Medicare, cut Medicaid,” Jean-Pierre said at a Wednesday briefing. A default would have global consequences, according to the White House. Global financial markets would lose faith in the United States, the dollar would weaken, stocks would fall, the US credit rating would likely be downgraded, and interest rates would broadly rise for many consumer loans. Moreover, a default would obstruct basic functions of the US government, including maintaining national defense, national parks, supporting the public health system, among other services. Last week, US Treasury Secretary Janet Yellen in a letter to House Speaker Kevin McCarthy, a Republican, urged Congress to take timely action to raise the United States’ debt limit. Increasing or suspending the debt limit does not authorize new spending commitments or cost taxpayers money, she said. 
Sputnik ExplainsWhat Are the US Treasury’s ‘Extraordinary Measures’ That Can Postpone Debt Limit Disaster?Yesterday, 21:10 GMTYellen said the Treasury will take “extraordinary measures” to prevent a government default, such as freezing investments in US civil service and federal employee retirement funds and savings. McCarthy said on Sunday that he would seek to negotiate with Biden about raising the federal debt ceiling in exchange for cuts in federal spending. Although Treasury will take action to prevent the US government from defaulting on its debt obligations, the administration warned those measures could be exhausted by June. In the past, according to Yellen, threats that the US government might fail to meet its obligations resulted in the only credit rating downgrade in the history of the United States in 2011.
