U.S. Treasury buys time for Biden and GOP on debt limit deal
CTV
The countdown toward a possible U.S. government default began Thursday with Treasury implementing accounting measures as a stopgap, while frictions between U.S. President Joe Biden and House Republicans raise alarms about whether the U.S. can sidestep a potential economic crisis.
The U.S. government bumped up against its debt limit Thursday, prompting the Treasury Department to take "extraordinary" accounting steps to avoid default -- as friction between U.S. President Joe Biden and House Republicans raised concern about whether the U.S. can sidestep an economic crisis.
The Treasury Department said in a letter to congressional leaders it had started taking "extraordinary measures" as the government had run up against its legal borrowing capacity of US$31.381 trillion. An artificially imposed cap, the debt ceiling has been increased roughly 80 times since the 1960s.
"I respectfully urge Congress to act promptly to protect the full faith and credit of the United States," Treasury Secretary Janet Yellen wrote in the letter.
Markets so far remain relatively calm, given that the government can temporarily rely on accounting tweaks to stay open and any threats to the economy would be several months away. Even many worried analysts assume there will be a deal.
But this particular moment seems more fraught than past brushes with the debt limit because of the broad differences between Biden and new House Speaker Kevin McCarthy, who presides over a restive Republican caucus.
Those differences increase the risk that the government could default on its obligations for political reasons. That could rattle financial markets and plunge the world's largest economy into a preventable recession.
Biden and McCarthy, R-Calif., have several months to reach agreement as the Treasury Department imposes measures to keep the government operating until at least June. But years of intensifying partisan hostility have led to a conflicting set of demands that jeopardize the ability of the lawmakers to work together on a basic duty.
