WASHINGTON — The US government is reaching its legal debt limit on Thursday, requiring the Treasury Department to start resorting to «extraordinary measures» to pay the bills.
In a recent letter to congressional leaders, Treasury Secretary Janet Yellen said those special financial tools can be extended until «early June» and that Congress will need to act to prevent default.
“However, the use of extraordinary measures allows the government to fulfill its obligations only for a limited time. Therefore, it is critical that Congress act in a timely manner to raise or suspend the debt limit,” Yellen wrote.
«Failure to meet government obligations would cause irreparable damage to the US economy, the livelihoods of all Americans, and global financial stability,» he said. «Indeed, in the past, even threats that the US government might default have caused real damage, including the only downgrade in our nation’s history in 2011.»
Yellen’s warning comes as the new House Republican majority, led by House Speaker Kevin McCarthy of California, demands conservative political concessions in the form of spending cuts to raise the debt ceiling. .
«Let’s change our behavior now. Let’s sit down. He’s the president. We’re the majority in the House. Democrats are the majority in the Senate. And that’s exactly the way the founders designed Congress to work, find compromise, and find common-sense compromise that brings us back to a balanced budget,» McCarthy told reporters Tuesday on Capitol Hill.
McCarthy, R-Calif., said an uncompromised debt limit increase was «totally off the table,» adding that federal retirement spending would have to be cut to save those programs from bankruptcy. «Let’s sit down and find a place where we can protect Medicare and Social Security for future generations. Let’s get our house in order.»
“I would like to sit down with all the leaders, especially the president, start having discussions. I think it’s a sign of arrogance, if you would say I wouldn’t even discuss it,» McCarthy said.
But the White House has made clear what President Joe Biden’s offer to lift the debt ceiling is: nothing.
“We should be dealing with the debt ceiling with no… no strings attached. It is important. We are not going to negotiate on this,” White House press secretary Karine Jean-Pierre told reporters.
“This is just another attempt by congressional Republicans to force unpopular cuts to critical programs for seniors, the middle class, and working families. Congress needs to act and act quickly. There is no excuse for brinkmanship,” he said Tuesday, dismissing the idea that the federal government can go over the debt limit and decide which bills to pay.
McCarthy has not specified a list of demands to accompany a debt limit increase. He would need a House majority to pass such a measure and pressure the Senate and the White House to negotiate.
Democrats seized on McCarthy’s comments, along with those of House conservatives who say retirement spending should be cut.
Former Speaker Nancy Pelosi, D-Calif., called it a «non-starter.»
«It’s almost silly for Republicans in the House to put Medicare and Social Security on the table as a condition of lifting the debt ceiling,» he said. «Hopefully, there will be an agreement that we reach responsibly to lift the debt ceiling.»
Still, any legislation to raise the debt ceiling would have to pass the Senate, which Democrats control with 51 votes, and where 60 votes are needed to break a filibuster.
“America pays its debts. Period. There should be no risky debt limit policy. It is reckless for Chairman McCarthy and the MAGA Republicans to attempt to use the full faith and credit of the United States as a political bargaining chip,” Senate Majority Leader Chuck Schumer, DN.Y., said in a statement. on Tuesday. «A breach would be catastrophic for America’s working families and lead to higher costs.»
Some GOP hardliners say the debt limit shouldn’t be raised at all.
«We can’t raise the debt ceiling,» said Rep. Andy Biggs, R-Ariz., saying Tuesday on Twitter. “Democrats have carelessly spent our taxpayers’ money and devalued our currency. They made their bed, so they must lie in it.»
The White House took aim at Biggs’ tweet on Wednesday.
«Reps. Biggs is completely wrong to actively support the ruin of millions of American livelihoods, 401k plans and small businesses, all in the name of scorched earth partisanship,» White House spokesman Andrew Bates said. Non-compliance would needlessly plunge the country into economic chaos, collapse and catastrophe, while giving our competitors like China a historic push against us.»