Here's what happens if Congress refuses to raise the debt ceiling
Why the Debt Ceiling Matters and What Happens if Congress Refuses to Raise Itess than two weeks after his chaotic ascent, Speaker of the House Kevin McCarthy is already facing down a potential crisis. In a letter sent to McCarthy on Friday, Treasury Secretary Janet Yellen warned that the U.S. is expected to hit its $31.4 trillion debt limit on Thursday, January 19, and outlined a plan to delay the resulting default until the summer.
Despite some of the political messaging around the debt ceiling, Congress is not authorizing new spending when it raises it. Instead, lawmakers are allowing the government to take on enough debt to fulfill the spending obligations it has already made. Those expenses include Social Security and Medicare benefits, tax refunds, salaries for government employees, veteran’s benefits, and interest on existing debt.If lawmakers are unable to raise the debt limit in time, the U.S.
“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,” Yellen wrote in her letter. In her letter to McCarthy, Yellen predicted that extraordinary measures would keep the government afloat at least until early June. But she also warned that the Treasury is only estimating exactly how long it can continue paying America’s debts.
, some right-wing lawmakers have demanded any increase in the debt limit come with deep spending cuts. Others hope to use the issue, a rare must-do item on the legislative agenda, as a bargaining chip to enact conservative policies. McCarthy said Tuesday he hoped to begin negotiations with other leaders and the president as soon as possible. But congressional Democrats and the White House say they will insist on a no-strings-attached debt limit increase.
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