On the brink of hitting the nation's legal borrowing limit on Thursday, the government is resorting to 'extraordinary measures' to avoid a default. Here's what you need to know about the debt limit?
Yellen’s Friday letter listed two measures that will begin this month in order to prevent the government from defaulting.
By suspending the payments, the government can reduce the amount of outstanding debt. That enables the Treasury Department to keep financing government operations, according to Yellen’s letter.No dispute there. Congress has given Treasury the authority to do so. The measures were first deployed in 1985 and have been used at least 16 times since then, according to the Committee for a Responsible Federal Budget, a fiscal watchdog.Before World War I, Congress needed to approve each bond issuance. The debt limit was created as a workaround to finance the war effort without needing a constant series of votes.
McCarthy said Tuesday that talks should begin immediately on the potential spending cuts that Republicans are seeking in exchange for raising the debt limit, even though the Biden administration has equated that demand to holding the U.S. economy hostage.“Who wants to put the nation in some type of threat at the last minute of the debt ceiling?” McCarthy said. “Nobody wants to do that. That’s why we’re asking, ’Let’s change our behavior now. Let’s sit down.
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