US hits debt ceiling, prompting Treasury to take extraordinary measures

CNN
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The US hit the debt ceiling 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 Capitol Hill to avoid a catastrophic default.

The battle lines for the high-stakes fight have already been set. Hardline Republicans, who have enormous sway in the House because of the party’s slim majority, have demanded that lifting the borrowing cap be tied to spending reductions. The White House countered that it will not offer any concessions or negotiate on raising the debt ceiling. And with the solution to the debt ceiling drama squarely in lawmakers’ hands, fears are growing that the partisan brinksmanship could result in the nation defaulting on its debt for the first time ever – or coming dangerously close to doing so.

Treasury Secretary Janet Yellen wrote a letter to House Speaker Kevin McCarthy Thursday, informing him that the nation’s outstanding debt is at its statutory limit of $31.4 trillion and that the agency will implement extraordinary measures so it doesn’t default on its debt, which would have enormous consequences on the US economy, global financial stability and many Americans. She said the measures would last through June 5.

This buys Congress some time – but how long the extraordinary measures can last is subject to “considerable uncertainty,” she wrote, stressing that it’s a challenge to forecast how many financial obligations the federal government must pay and how much revenue it will take in months into the future.

“I respectfully urge Congress to act promptly to protect the full faith and credit of the United States,” she wrote.

The announcement follows the warning Yellen sent last week about the approaching debt limit and the temporary Band-aid of the extraordinary measures.

But her missive has failed to spark bipartisan discussion so far. Instead, both Republicans and Democrats reaffirmed their rigid positions over the past week.

National Economic Council Director Brian Deese on Thursday repeatedly called on Congress to meet the United States’ obligations by raising 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 told Kaitlan Collins on “CNN This Morning,” calling it Congress’ “basic, fundamental obligation.”

He added, “Even just the specter that the United States might not honor its obligations does damage to the economy.”

McCarthy must walk a fine line since any member can call for a motion to vacate the speaker’s chair, one of several concessions he made to gain the top post after 15 rounds of voting earlier this month.

For now, he is leaning in on using the debt ceiling crisis to cut spending and balance the US budget. On Tuesday, McCarthy rejected Democratic calls for a clean debt ceiling increase without any conditions attached –…