By Kevin Zhang
The U.S. hit the debt ceiling of $31.4 trillion set by Congress on Thursday, forcing the Treasury Department to start taking extraordinary measures to keep the government paying its bills and escalating pressure on the Capitol to avoid a disastrous default.
The impending fight in Congress has already been set. Hardline Republicans, who have enormous influence in the House due to the party’s slim majority, have demanded that lifting the borrowing cap be tied to spending reductions. The White House has responded that it will not offer any concessions or negotiate on raising the debt ceiling. With the solution to the debt crisis solely in lawmakers’ hands, and with the partisan brinksmanship in Congress, fears are mounting that the nation could default on its debt for the first time ever, or come dangerously close to doing so.
Treasury Secretary Janet Yellen wrote a letter to House Speaker Kevin McCarthy on Thursday, informing him that the nation’s outstanding debt is at its statutory limit of $31.4 trillion and that the agency will implement measures to counter the possibility of a default on debt, which would be devastating for the U.S. economy, global financial stability, and many Americans. She informed him that the measures would last up to June 5th.
The past week, Yellen had sent a warning about the approaching debt limit and the temporary solution of extraordinary measures.
However, her missive failed to spark bipartisan discussion, with both Republicans and Democrats reaffirming their hardline positions.
National Economic Council Director Brian Deese on Thursday repeatedly called on Congress to raise the debt limit, warning against “economic chaos” that could ensue should Congress fail to do so. “This is about economic stability versus economic chaos,” Deese said.