WASHINGTON (AP) — The United States reached its statutory debt limit on Thursday, and the Treasury Department announced that it has begun taking “extraordinary measures” to pay the bills.
Treasury Secretary Janet Yellen said in a letter to congressional leaders on Thursday that those special financial tools to meet the country’s obligations can be used until at least Monday, June 5. After they expire, Congress must act to avoid a default.
Yellen stated in the letter that “the period of time that extraordinary measures may last is subject to considerable uncertainty, including the challenge of forecasting the United States Government’s payments and receipts months in advance.”
“I respectfully urge Congress to act swiftly to protect the United States’ full faith and credit,” she wrote.
The new Republican House majority, led by California Speaker Kevin McCarthy, demands conservative policy concessions in the form of spending cuts in order to raise the debt ceiling.
“Let us change our ways right now. Let’s take a seat. He is the President of the United States. We have a majority in the House. The Senate is controlled by Democrats. And that is exactly how the founders intended Congress to function: to find the commonsense compromise that returns us to a balanced budget “McCarthy told reporters on Capitol Hill on Tuesday.
McCarthy, R-Calif., said an increase in the debt limit with no strings attached was “completely off the table,” and that federal retirement programmes should be reduced to avoid bankruptcy. “Let us sit down and figure out how to protect Medicare and Social Security for future generations. Let’s get our affairs in order.”
In a statement, House Ways and Means Committee Chair Jason Smith, R-Mo., joined McCarthy’s call for President Joe Biden to begin negotiations.
“Instead of attacking his political opponents, President Biden should be spending this time working with House Republicans to address the debt ceiling in a way that imposes some fiscal sanity. Otherwise, the President is simply planning America’s next debt crisis,” said Smith, chair of the committee that oversees taxes and social spending.
However, the White House has made it clear that Biden’s offer to raise the debt ceiling amounts to nothing.
“We should deal with the debt ceiling without conditions. It is critical. “We’re not going to negotiate on this,” said White House press secretary Karine Jean-Pierre.
“This is just another attempt by congressional Republicans to force unpopular cuts on programmes critical to seniors, the middle class and working families. Congress must act, and act quickly. There is no justification for political brinkmanship “She denied on Tuesday that the federal government can exceed the debt limit and choose which bills to pay.
McCarthy has not specified a list of demands that would be attached to an increase in the debt limit. To pass such a bill and put pressure on the Senate and the White House to negotiate, he would need a majority in the House. McCarthy does not appear to have the votes to pass anything.
Democrats seized on McCarthy’s comments, as well as those of House conservatives who argue that retirement spending should be reduced.
Former House Minority Leader Nancy Pelosi, D-Calif., called it a “nonstarter.”
“It’s almost comical for Republicans in the House to propose Medicare and Social Security as a condition for raising the debt ceiling,” she said. “Hopefully, we’ll be able to reach a responsible agreement to raise the debt ceiling.”
However, any legislation to raise the debt ceiling would have to be approved by the Senate, which Democrats control with 51 votes and where 60 votes are required to break a filibuster.
Republicans, according to Senate Finance Committee Chair Ron Wyden, D-Ore., are acting like hostages.
“Republicans won a House majority, and they are free to advocate for their priorities, but it is unacceptable to hold American families and the economy hostage in this way,” he said in a statement. “Democrats will not accept Republican threats, particularly to Medicare and Social Security. Republicans must withdraw their opposition to raising the debt ceiling immediately.”
Some House Republicans believe the borrowing limit should not be raised at all.
“We cannot raise the debt ceiling,” Arizona Rep. Andy Biggs tweeted Tuesday. “Democrats have carelessly spent our taxpayer money and devalued our currency. They’ve made their bed, so they’ll have to sleep in it.”
The White House responded to Biggs’ tweet on Wednesday.
“Rep. Biggs is dead wrong to actively support the destruction of millions of American livelihoods, 401k plans, and small businesses in the name of scorched earth partisanship,” said White House spokesman Andrew Bates in a statement. “Default would needlessly plunge the country into economic chaos, collapse, and catastrophe while giving our competitors like China a historic boost against us.”
