US Debt Ceiling Raises Economic Woes

The US Treasury Department announced the beginning of “extraordinary measures”, meaning a series of accounting measures, and even maneuvers, to avoid breaching the federal governments’ borrowing cap according to a letter to Congress by Treasury Secretary Janet Yellen

The Treasury Department will adopt extraordinary measures to allow the federal government to keep paying its bills. The United States hit its debt limit on Thursday and the measures are meant to prevent breaching its statutory debt limit, so, Yellen asked lawmakers to raise or suspend the cap so that the government can continue meeting its financial obligations.

“The period of time that extraordinary measures may last is subject to considerable uncertainty, including the challenges of forecasting the payments and receipts of the U.S. Government months into the future,” Yellen said, adding “I respectfully urge Congress to act promptly to protect the full faith and credit of the United States”.

The milestone of hitting the country’s $31.4 trillion debt cap is the product of decades of tax cuts and increased government spending by both Republicans and Democrats. But at a moment of heightened partisanship and divided government, it is also a warning of the entrenched partisan battles that are set to dominate Washington in the months to come, and that could end in economic shock.