U.S. Treasury Secretary Janet Yellen holds a news conference within the Money Room on the U.S. Treasury Department in Washington, U.S. July 28, 2022.Â
Jonathan Ernst | Reuters
The Treasury Department began taking so-called extraordinary measures to maintain paying the federal government’s bills because the U.S. hit its debt limit Thursday, Treasury Secretary Janet Yellen said.
In a letter addressed to House Speaker Kevin McCarthy, R-Calif., Yellen said the Treasury will suspend latest investments within the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Advantages Fund from Thursday until June 5, 2023. But she warned each moves are subject to “considerable uncertainty” if Congress doesn’t pass a bill to extend the $31.4 trillion debt ceiling.
The Treasury secretary told lawmakers Friday that she believes the extraordinary steps could allow the federal government to pay its obligations until early June. Yellen last week urged Congress to “act in a timely manner to extend or suspend the debt limit,” as failing to accomplish that could lead on to a first-ever default on U.S. debt and cause economic damage world wide.
The White House also urged Congress on Friday to lift the debt ceiling “without condition.”
The Treasury secretary warned last week that the U.S. government would hit the statutory debt ceiling on Thursday, after which extraordinary measures can be taken to maintain the federal government from defaulting on its debt obligations.
The U.S. government has not defaulted on its debt, however the debt ceiling has been raised 22 times from 1997 to 2022, in response to the Government Accountability Office. The Biden administration will prioritize negotiations for a latest bill to extend the debt limit after the mid-April tax deadline, in response to a senior White House official.
Concessions sought by the brand new Republican House majority have led to concerns that Congress could have trouble raising the debt ceiling before June. Certain GOP lawmakers have said they need to slash spending as a part of an agreement to extend the borrowing limit.
Some Republican representatives have said major spending cuts to key government programs like Medicare and Social Security were a part of the negotiations that helped McCarthy secure support from hard-line conservatives and win the speakership.
McCarthy has called for cuts to avoid bankrupting programs like Medicare and Social Security.
“You could not just keep increasing it,” he said on the Fox News Channel program “Fox News Sunday.” “Let’s sit down and alter our behavior for the nice of America. Because what we will do is bankrupt this country and bankrupt these entitlements if we do not change their behavior today.”
Other House Republicans, similar to Reps. Ralph Norman of South Carolina and Chip Roy of Texas, have also demanded spending decreases ahead of any debt limit increase.
“You simply have so many leverage and negotiating points. The debt ceiling is certainly one of those,” Roy said.
White House press secretary Karine Jean-Pierre told reporters this week that President Joe Biden is unwilling to tie conditions to debt ceiling negotiations.
“That is just one other attempt by congressional Republicans to force unpopular cuts on programs critical to seniors, the center class and dealing families. Congress must act and accomplish that quickly. There isn’t a excuse for political brinkmanship,” Jean-Pierre said Tuesday.
The debt ceiling limits the extent of debt the federal government can assume. Lifting it ensures the federal government can proceed to borrow — not spend — to satisfy its budgeted goals.
