US Reaches Debt Ceiling Thursday, Treasury Dept. Taking 'Extraordinary Measures' To Avoid Going Into Default

The coming political showdown over raising the federal debt ceiling took on added significance Thursday as the Treasury Department alerted congressional leaders that it has reached its legal borrowing capacity and is now taking “extraordinary measures” to avoid going into default.

Thursday, January 19th 2023, 5:43 pm



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The coming political showdown over raising the federal debt ceiling took on added significance Thursday as the Treasury Department alerted congressional leaders that it has reached its legal borrowing capacity and is now taking “extraordinary measures” to avoid going into default.

Treasury Secretary Janet Yellen indicated last week that these measures — accounting practices to move money around — should give Congress approximately six months to reach an agreement.

However, friction between President Biden and House Republicans is raising concerns that the two sides may be too far apart to find a compromise and sidestep a major economic crisis.

"In the end, I think the most important thing to remember is that America must never default on its debt, it never has and it never will," Senate Minority Leader Mitch McConnell (R-KY) told reporters. "But we'll end up in some kind of negotiation with the administration over what the circumstances or conditions under which the debt ceiling be raised."

House Speaker Kevin McCarthy said he's ready to get to it.

"Why wouldn't we sit down now, set a budget, set a path to get us to a balanced budget, and let's start paying this debt off," McCarthy (R-CA) told reporters this week.

The national debt has now hit the ceiling, currently set at $31.4 trillion. 

It's been raised dozens of times by Republicans and Democrats together over the past 60 years, but a vocal portion of the new Republican majority in the House is said things have to change.

"The American people have spoken," Rep. Kevin Hern (R-OK1) said in a recent interview. "They want spending cut, they want the economy to return to something that's affordable."

Among the concessions, the 20 GOP hardliners pushed for and got from Speaker McCarthy this month was a pledge that House leadership would not support increasing the debt ceiling unless it's paired with cuts in discretionary spending, the domestic programs that make up about a third of the total budget.

"And I’m hopeful that with what we’re facing in this nation -- $1 trillion in annual debt service payments before the end of this decade -- we will have the courage to put our country’s best interest ahead of our own personal interest in politics," Rep. Josh Brecheen (R-OK2) said in an interview last week.

But Biden is pushing right back, insisting that avoiding default on debt that both parties have run up can't be a term in negotiations, and will not be.

"It is something that should be done without conditions," White House Press Secretary Karine Jean-Pierre said. "We should not be negotiating around it. It is the duty, the basic duty, of Congress to get that done."

Democrats point out that they joined Republicans three times in raising the debt ceiling during the Trump presidency.

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