What is the current debt ceiling? Janet Yellen calls on Congress to raise the national debt limit
The United States could default on its obligations if lawmakers fail to come to an agreement and increase, or at least suspend, the debt ceiling.
Treasury Secretary Janet Yellen has informed Congress that the United States is projected to reach its debt limit next Thursday, warning that she will then be forced to take “extraordinary measures” to avoid a default.
The debt ceiling is the limit of debt that the nation is able to accrue and is defined by Congress. The national debt limit currently stands at $31.4 trillion. Yellen called on Congress to pass legislation to suspend or raise the borrowing limit “in a timely manner”.
Yellen warned: “Failure to meet the government’s obligations would cause irreparable harm to the U.S. economy, the livelihoods of all Americans, and global financial stability.”
The Treasury estimates that the extraordinary measures, along with existing reserves of cash, should ensure that the US is able to balance the books until at least June.
“In the past, even threats that the U.S. government might fail to meet its obligations have caused real harms, including the only credit rating downgrade in the history of our nation in 2011,” she added, in reference to an impasse on the debt ceiling during the Obama administration.
That event, sometimes known as the 2011 debt ceiling crisis, also came at a point when the Republicans had just won a majority in the House during a Democratic presidency. There is concern that newly-installed GOP lawmakers may try to lodge their opposition to what they deem as unsustainable spending over the past two years.
McCarthy looks to bipartisan solution for debt ceiling crisis
After his protracted election as Speaker of the House, Rep. Kevin McCarthy has turned his attention to the debt ceiling issue. McCarthy required 15 ballots to secure the neccessary votes from his disparate Republican caucus and this will be the first test of his abilities as Speaker to unify the party.
McCarthy, who has shown willingness to operate in a bipartisan manner in the past, said on Thursday that he had already spoken to President Biden in a bid to find common ground.
“I had a very good conversation with the President when he called me, and I told him I’d like to sit down with him early and work through these challenges,” McCarthy said.
The new Speaker adding that he would consider a version of the 2019 deal between his predecessor, Nancy Pelosi, and then-President Trump to secure a compromise. McCarthy explained that he could support “debt ceiling agreement” that provided “a cap agreement for two years, to cap the spending and make those decisions”.
However those efforts could be complicated by a real desire amongst elements of the GOP to slash government spending. Speaking to Fox News earlier this week McCarthy said that he would “look at every single dollar spent” as part of the passage of annual spending bills.