The Treasury Department said in a letter to congressional leaders it has started taking “extraordinary measures” as the government has brushed up against its legal borrowing capacity of $38.381 trillion
WASHINGTON — The countdown toward a possible U.S. government default began Thursday with Treasury implementing accounting measures as a stopgap, while frictions between President Joe Biden and House Republicans raise alarms about whether the U.S. can sidestep a potential economic crisis.
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. Asked twice on Wednesday if there was evidence that House Republicans can ensure that the government would avert a default, White House press secretary Karine Jean-Pierre said it’s their “constitutional responsibility” to protect the full faith and credit of the United States. She did not say whether the White House saw signs at this stage that a default was off the table.McCarthy said Biden needs to recognize the political realities that come with a divided government.
The debt ceiling was originally a fix made during World War I that enabled bonds to be issued without getting repeated congressional approvals. But in an era of polarization and rising debt loads, the limit has been transformed into a political bludgeon. It does not reflect the actual capacity of the federal government to borrow, simply how much it is legally able to do so without congressional signoff.
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