WASHINGTON — The U.S. reached its borrowing cap on Thursday and the Treasury Department said it took “extraordinary measures” to prevent the country from defaulting on its debt.
If the country can’t pay its bills, the U.S. could go into default, which could lead to an economic recession.
The long-term solution must come from Congress, but lawmakers remain at a stalemate.
Treasury Secretary Janet Yellen sent a letter to Congress Thursday, outlining the steps the department took to buy some time, which includes temporarily stopping payments to some government retirement funds.
Yellen points to suspended payments for the Civil Service Retirement and Disability Fund (CSRDF) and the Postal Service Retiree Health Benefits Fund (PSRHBF).
“As I stated in my January 13 letter, the period of time that extraordinary measures may last is subject to considerable uncertainty, including the challenges of forecasting the payments and receipts of the U.S. Government months into the future,” Yellen wrote. “I respectfully urge Congress to act promptly to protect the full faith and credit of the United States.”
Congress can raise or temporarily suspend the debt ceiling.
House Republicans are demanding spending cuts as part of any measure to extend how much money the U.S. can borrow.
“If you had your child and you gave him a credit card, and they kept raising it, and they hit the limit, so you’ve just raised it again, clean increase, and again and again. Would you just keep doing that? Or would you change the behavior?” said House Speaker Kevin McCarthy (R-CA).
The spending cuts are unlikely to be accepted by the Biden administration or Senate Democrats.
“We should not be negotiating around it,” said White House Press Secretary Karine Jean-Pierre on Jan. 18. “It is the duty of Congress to get that done.”
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