The federal government hit its debt ceiling Monday, forcing the administration to turn to what Treasury Secretary Tim Geithner calls “extraordinary measures” to pay the government’s bills and avoid default.
Although Geithner has estimated the government can get by without a debt limit increase until early August, many financial experts, business leaders and elected officials have warned that continued delays by Congress could at some point disrupt the credit markets and cause higher interest costs.
The Concord Coalition has urged Congress to reach agreement on some fiscal reforms while approving the “must pass” legislation to raise the debt limit. But Democrats and Republicans continue to disagree on how this might be done, and people on both sides have tried to take more and more options off the negotiating table.
Vice President Joe Biden and six top lawmakers held two meetings last week and plan more later this month. Biden said he thought these talks could eventually produce an agreement on how to make “a significant down payment” toward $4 trillion in deficit reduction over the next decade.
In addition, Obama met last week with senators in both parties. Both Republican and Democratic leaders described these meetings and the Biden-led talks as constructive.
Senate Republican Leader Mitch McConnell assumed a higher profile in the debt limit debate last week, ruling out tax increases and saying he would not vote to raise the limit without significant changes in Medicare and Medicaid. He did not specify the changes he wanted, however.
Secretary Geithner’s Letter to Congress Outlining Actions Required to Meet Government Obligations
Treasury Department: As US Reaches Debt Limit, Geithner Implements Additional Extraordinary Measures to Allow Continued Funding of Government Obligations
Treasury Department FAQ: Actions Required to Avoid Breaching Debt Limit
GAO: Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market
New York Times: McConnell Ties Debt Limit to Spending Reductions