The U.S. Treasury Department began implementing extraordinary measures to prevent the country from defaulting as the federal government reached its $31.4 trillion debt limit.
Treasury Secretary Janet Yellen sent a letter to the Speaker of the US House of Representatives, Kevin McCarthy, about the Department’s measures to limit the debt.
Reminding that the US$ 31.4 trillion debt limit is estimated to be reached today, Yellen stated that the Treasury Department started to implement extraordinary measures today.
Yellen stated that in this context, new investments in the Public Service Retirement and Disabled Persons Fund and the Postal Service Retirement Health Benefits Fund were suspended until 5 June.
Stressing that the duration of emergency measures is subject to considerable uncertainty, Yellen reiterated her call to Congress to “act immediately” to preserve the “full confidence and reputation” of the United States.
Republicans argue for spending cuts
In the US, the federal government is threatened with reaching the $31.4 trillion debt limit, which could lead to default.
The debt limit refers to the upper limit on the amount of money the US government can borrow to pay off its debts.
US President Joe Biden’s administration has called for Congress to increase the debt limit, while Republicans, who have just won a majority in the House of Representatives, argue that spending cuts should be cut.
The debt limit issue has been described as a stalemate between Democrats and Republicans that “could lead to a financial crisis in a few months”.
With the measures taken by the US Treasury Department today, it is aimed to prevent the increase in the general debt level by using the financial resources of some pension funds and to continue to make federal payments. The Department’s measures also give Congress five months to pass legislation to raise or suspend the debt limit.
In a letter sent to McCarthy, Speaker of the US House of Representatives, last week, US Treasury Secretary Yellen warned that “the US could reach its debt limit on January 19” and urged Congress to take action to increase or suspend the debt limit.
In the United States, the federal government’s debt limit was increased 22 times between 1997 and 2022.
