House Republicans have called for spending cuts to certain programs as a condition for raising the country’s debt ceiling.
U.S. Treasury Secretary Janet Yellen on Saturday warned against the country defaulting on its debt, saying that it “would cause widespread damage to the U.S. economy.”
The United States on Thursday hit its $31.4 trillion debt limit, with Yellen announcing that the Treasury was taking “extraordinary measures” to keep paying the federal government’s bills and keep certain systems funded. Such measures are a last-ditch effort that can be undertaken should the country reach its debt ceiling. Should they be exhausted, however, the U.S. would default on its debt.
The debt limit is the cap on the amount of money that the U.S. government can borrow to pay its debts. It also allows the government to pay existing legal obligations that Congress and presidents have made in the past, according to the Treasury.
In a letter sent to newly-elected House Speaker Kevin McCarthy and other Republican and Democratic leaders in the House and Senate on Friday, Yellen wrote that the Treasury anticipates implementing two measures to avoid breaching the debt limit: redeeming existing and suspending new investments in the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund, as well as suspending reinvestment of the Government Securities Investment Fund of the Federal Employees Retirement System Thrift Savings Plan.
