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U.S. Federal Gov't Has Already Breached Debt Limit
- By The Financial District
- Jan 23, 2023
- 2 min read
The US government was due to hit its $31.4 trillion borrowing limit on Thursday, amid a standoff between the Republican-controlled House of Representatives and President Joe Biden's Democrats that could lead to a fiscal crisis in a few months, David Morgan reported for Reuters.
Photo Insert: The prospect for brinkmanship has raised concerns in Washington and on Wall Street about a bruising fight over the debt ceiling this year that could be at least as disruptive as the protracted battle of 2011.
Republicans, with a newly won House majority, aim to use the congressionally mandated federal debt ceiling to exact spending cuts from Biden and the Democratic-led Senate.
Thursday's deadline will have little immediate effect because Treasury officials are prepared to begin employing emergency cash management measures to stave off default.
More serious risks will emerge closer to June when the government approaches the so-called X date, beyond which the Treasury would run out of emergency maneuvers.
Ahead of that deadline, there was no sign that either side was willing to bend. "It is something that should be done without conditions. We should not be negotiating around it. It is the basic duty of Congress to get that done," White House Press Secretary Karine Jean-Pierre told reporters.
Republicans are instead pursuing a "debt prioritization" plan that would seek to avert default by urging the Treasury to prioritize debt payments, and possibly other priorities such as Social Security and Medicare, should the limit be breached during negotiations.
Republicans hope to complete the legislation by the end of March.
The prospect for brinkmanship has raised concerns in Washington and on Wall Street about a bruising fight over the debt ceiling this year that could be at least as disruptive as the protracted battle of 2011, which prompted a downgrade of the U.S. credit rating and years of forced domestic and military spending cuts.
