The Treasury Department has started taking ‘extraordinary measures’ as the government runs up against its legal borrowing capacity of US$38.381 trillion .
« : »The countdown toward a possible US government default began on Thursday with Treasury implementing accounting measures to buy time as frictions between President Joe Biden and House Republicans raise alarms about whether the United States can sidestep a potential economic crisis. The Treasury Department said in a letter to congressional leaders it has started taking “extraordinary measures” as the government has run up against its legal borrowing capacity of US$38.381 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 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 wholly preventable recession. Biden and California Republican McCarthy, have several months to reach agreement as the Treasury Department imposes “extraordinary 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 jeopardise the ability of the lawmakers to work together on a basic duty. Both China and the UK want in, so why is the US reluctant to join the CPTPP? Biden insists on a “clean” increase to the debt limit so that existing financial commitments can be sustained and is refusing to even start talks with Republicans.
