The United States today hit its statutory debt limit of $14.29 trillion. This means that the U.S. cannot legally borrow money to meet its current obligations.
It also means that U.S. Treasury Secretary Timothy Geithner will have to implement certain “extraordinary measures” in order to keep the government from defaulting on its debt for the first time in history. In a letter to Senate Majority Leader Harry Reid (D-NV), Geithner declared a “debt issuance suspension period” for the Civil Service Retirement and Disability Fund, which will permit the Treasury to redeem a portion of existing Treasury securities held by that fund as investments, while suspending the issuance of new Treasury securities to that fund as investments.
Geithner also suspended the daily reinvestment of Treasury securities held as investments by the Government Securities Investment Fund of the Federal Employees’ Retirement Thrift Savings Plan, which, in layman’s terms, essentially means dipping into pensions to pay the obligations that would be otherwise handled with debt.
“Each of these actions has been taken in the past by my predecessors during previous debt limit impasses,” said Geithner. “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 State and to avoid catastrophic economic consequences for citizens.”
“I again urge Congress to act to increase the statutory debt limit as soon as possible,” he added.
NACM’s May Monthly Survey asks what you would do to address the nation’s ongoing debt ceiling controversy. Click here to participate today. Respondents each earn .1 continuing education units (CEUs) and are automatically entered into a drawing for a free teleconference registration.
Jacob Barron, NACM staff writer