Ipoh Community Forums

Full Version: The US just hit the debt limit. What happens now?
You're currently viewing a stripped down version of our content. View the full version with proper formatting.
[Image: 1241297206.0.jpg]


The United States hit the debt ceiling — the total amount of money the federal government can legally borrow — on Thursday as lawmakers continued to clash over negotiations to raise the limit. The Treasury Department is now deploying what it calls “extraordinary measures” to make sure the country can keep paying its bills.

Although “extraordinary measures” might sound alarming, economists say the Treasury has a history of using them, and those changes shouldn’t immediately impact the lives of Americans. They essentially work as accounting tools that temporarily allow the government to continue funding its normal operations and help buy Congress more time to reach a deal.

In a letter to congressional leadership, Treasury Secretary Janet Yellen said the Treasury Department started to use some of its extraordinary measures after the current debt limit of $31.4 trillion was projected to be hit on Thursday, but she said the amount of time the measures would last was subject to “considerable uncertainty.”

Although this means the country will be able to avoid defaulting on its debt for now, if that does eventually happen for the first time, the consequences would be dire. That would not only be bad for Americans who depend on government benefits like Social Security checks, but it would also create chaos in the stock market and inflict pain across the broader economy.

- More -