WASHINGTON – The Treasury Department Thursday began “extraordinary measures” to pay the nation’s bills after reaching a limit on how much its allowed to borrow, Treasury Secretary Janet Yellen told Congress.
The amount of time the Department can continue taking steps to avoid defaulting on the debt unless the $31.381 trillion limit is raised is uncertain, Yellen wrote in her letter to lawmakers.
“I respectfully urge Congress to act promptly to protect the full faith and credit of the United States,” she said.
Related:5 ways your finances could be impacted if the debt ceiling isn’t raised by the deadline
The debt ceiling refers to the maximum amount the U.S. government can spend on its existing obligations, including Social Security and military salaries. Voting to raise the debt ceiling would not be a vote to spend more money. Without a higher debt ceiling, the government would default on bills it already has incurred and has committed to pay.
Economists warn that defaulting on its debt – something the U.S. has never done – could cause financial markets to tank, hurting 401(k)s and other investments. A debt ceiling standoff in 2013 cost the economy 1% in GDP.
Since 1960, Congress has acted 78 times to permanently raise, temporarily extend, or revise the definition of the debt limit – 49 times under Republican presidents and 29 times under Democratic presidents, according to the Treasury Department.
Story Credit: usatoday.com