It’s officially time for the U.S to raise the roof, or at least the ceiling. Treasury Secretary Timothy Geithner announced yesterday that U.S Government has hit the debt ceiling—sort of.
The debt ceiling is a legal limit set up by congress allotting a certain amount of money the federal government can borrow from the public through U.S bonds, medicare and social security, as well as other trust funds. The current limit is $14.294 trillion, and according to Geithner, we would have hit the limit yesterday had the Treasury not gone to some drastic measures.
To avoid hitting the $14.294 trillion limit, the Treasury has decided to stall by suspending investments on two funds directly related to the retirement and disability benefits of federal civilian employees. Geithner emphasized the fact that these suspensions should not affect current or future employees because they will get the expected payments once the ceiling is raised.
Congress has been struggling with the budget to avoid hitting the ceiling for the past year, nearly shutting down multiple times. In the latest shutdown scare, it was pointed out that U.S. was expected to hit its debt limit on May 16 an eerily accurate prediction.
Although, the threats of a government shutdown have been settled, there is a much larger debate currently taking place; raise the ceiling or not? Currently, it is a congressional battle as Republicans (and a few Democrats) refuse to move forwards with any increase unless $2 trillion is cut in the budget set up for the next decade.
Mr. Geithner is not concerned with which party settles on an agreement, he is just looking for a deal to be reached. In his most recent letter to Congress Geithner writes, “I have written to Congress on previous occasions regarding the importance of timely action to increase the debt limit in order to protect the full faith and credit of the United States and avoid catastrophic economic consequences for citizens. I again urge Congress to act to increase the statutory debt limit as soon as possible.”
In the past letter Timothy Geithner moved the expected limit date from May 16 to an unspecified day ranging from July 8 to Aug. 2.