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Friday, January 20, 2023

U.S. reaches $31.4 trillion debt limit, to deepen economic, political concerns

The U.S. on Thursday, reached its debt limit of $31.4 trillion, compelling the Treasury Department to introduce “extraordinary measures.”

• January 19, 2023

The U.S. on Thursday, reached its debt limit of $31.4 trillion, compelling the Treasury Department to introduce “extraordinary measures” to protect what is left of America’s economic dignity for the next few months.

The move has stirred fresh economic and political concerns under the Joe Biden administration.

The “extraordinary measures,” according to Treasury Secretary Janet Yellen, would prevent the country from going over its legal debt ceiling. She pleaded with lawmakers to consider raising the limit to enable the U.S. government to fulfill its financial commitments.

“The use of extraordinary measures enables the government to meet its obligations for only a limited amount of time,” Ms Yellen wrote in a letter to Congress leaders.

The letter added, “It is therefore critical that Congress act in a timely manner to increase or suspend the debt limit. Failure to meet the government’s obligations would cause irreparable harm to the U.S. economy, the livelihoods of all Americans, and the global financial stability.”

Opinions are sharply divided in the Congress as Republicans, in exchange for their cooperation in raising the debt limit, are demanding significant spending reductions. On the other hand, Democrats, who are loyal to President Joe Biden’s administration, want the limit raised without any concessions.

The extraordinary measures, however, have an expiration date. They are projected to fulfill U.S. financial obligations until June.

“The period of time that extraordinary measures may last is subject to considerable uncertainty, including the challenges of forecasting the payments and receipts of the U.S. government months into the future,” Ms Yellen wrote. “I respectfully urge Congress to act promptly to protect the full faith and credit of the United States.”

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