This week, Treasury Secretary Janet Yellen notified Congress that the United States is anticipated to approach its debt ceiling on Thursday and that “exceptional measures” will be required to prevent default. Yellen cautioned that the U.S. economy and the stability of the global financial system may suffer irreparable harm if the government’s commitments are not met.
Some of the measures include diverting some funds, such as retirement plan contributions for federal employees, to pay for necessities like Social Security and debt instruments. According to Yellen, these steps will buy the government some time as Congress works to either increase the country’s borrowing capacity or temporarily suspend it once more.
The White House has made it clear that they would not permit the demands of newly powerful GOP members to be used as leverage over the nation’s credit. The administration has been vociferous in its support of a clear debt ceiling increase, but it is now up to Congress to decide how to handle the debt limit.
A statutory cap on the total amount of public debt the United States can issue to fund its operations is known as the debt ceiling. Numerous times in the past, Congress has raised or temporarily suspended the debt ceiling, so it’s unclear how the current scenario will affect things.
To avert a default and any potential long-term economic and financial harm, the Treasury Department is pleading with Congress to take swift action. The public has been reassured by Secretary Yellen that the government will make every effort to ensure that the nation’s financial commitments are met on schedule.