The federal government has come up against its borrowing limit of more than $38.3 trillion, Treasury Secretary Janet Yellen announced Thursday, setting up an-early June fight to avoid a potential US default.
In a letter to House Speaker Kevin McCarthy (R-Calif.), Yellen said the Treasury had begun “extraordinary measures” to avoid breaching the limit and keep normal government operations going through June 5. However, Yellen added that “the period of time that extraordinary measures may last is subject to considerable uncertainty … I respectfully urge Congress to act promptly to protect the full faith and credit of the United States.”
House Republicans have demanded cuts in spending in exchange for increasing the debt ceiling, as has been done approximately 80 times since the 1960s. However, the Biden administration has flatly refused to consider any reductions.
“We’ve been very clear there should not be any negotiations around here,” White House press secretary Karine Jean-Pierre told reporters Wednesday. “We’re going to be very clear it should be done without conditions.”
The Treasury Department projects that the federal government on Thursday will reach its legal borrowing capacity. AP
Treasury Secretary Janet Yellen wrote in a letter to Speaker Kevin McCarthy that the Treasury has taken “extraordinary measures” to avoid going over the limit. Photo by SAUL LOEB/AFP via Getty ImagesHowever, McCarthy has insisted Biden recognize that negotiations are part of the reality of divided government after two years of unified Democratic control in Washington.
“Why create a crisis over this?” the speaker said this week. “I mean, we’ve got a Republican House, a Democratic Senate. We’ve got the president there. I think it’s arrogance to say, ‘Oh, we’re not going to negotiate about pretty much anything’ and especially when it comes to funding.”
The “extraordinary measures” referenced by Yellen include accounting maneuvers that would put a hold on contributions and investment redemptions for government workers’ retirement and health care funds. What happens if these measures are exhausted without a debt limit deal is unknown.
Yellen urged Congress in her letter to “act promptly to protect the full faith and credit of the United States.” Photo by Anna Moneymaker/Getty Images
House Republicans have demanded cuts in spending in exchange for raising the debt ceiling. AP“To some extent, the ‘extraordinary measures’ are the backup plan, and once those are exhausted the next step is a major question mark,” economists at Wells Fargo wrote in a Thursday analysis — though market observers say their default analysis is that a deal will be reached before June 5, the so-called “X-date.”
With Post wires
