January 19th is the date likely on the mind of all or most Congress members. The anxious race against time comes after Treasury Secretary Janet Yellen wrote a letter to House Speaker Kevin McCarthy on Friday. In that letter, Yellen warns the U.S. government will reach its debt limit on January 19th, and the government will have to initiate “extraordinary measures” to avoid default on its obligations. Also, in the letter, Yellen warns, “Yet the use of extraordinary measures enables the government to meet its obligations for only a limited amount of time. It is therefore critical that Congress act in a timely manner to increase or suspend the debt limit.”
What is the Debt ceiling?
The debt ceiling is the total amount of money the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments.
What happens if there is a default?
Yellen reminds in the letter. “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 White House wants Congress to pass a ‘clean’ increase in the debt limit, which would cover spending already committed to through the Appropriations bills. This poses as a problem for House Speaker Kevin McCarthy who agreed not to bring a debt limit increase to the floor without attaching spending cuts. McCarthy made the agreement to receive enough votes for the House Speaker position, which took 15 tries before he was made House Speaker. Some House members have voiced the possibility of calling for the removal of McCarthy if he comes to the floor with a clean debt ceiling increase.
What McCarthy will do ahead of January 19th is unknown, but the outcome could be severe for most of America.
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