Treasury predicts debt limit Jan. 19

U.S. Will Hit Debt Limit Jan. 19, Yellen Tells Congress

The Treasury Department expects to begin taking “extraordinary measures” to continue paying the government’s obligations ahead of what’s expected to be a big fight to raise the borrowing cap.
By Alan Rappeport and Jim Tankersley, The New York Times, Jan. 13, 2023

Treasury Secretary Janet L. Yellen warned on Friday that she would have to begin employing “extraordinary measures” to continue paying the nation’s bills this month if lawmakers do not act to raise the statutory debt limit and that her powers to delay a default could be exhausted by early June.…“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,” Ms. Yellen wrote…[end quote]

I can’t say more without getting into politics. In fact, the entire subject of the debt limit is political.

Congress has already allocated the money that Treasury must raise by selling Treasury debt. Treasury has ZERO power to change Congress’ expenditures since the Constitution gives the power to spend (and tax) to Congress.

The debt limit only limits Treasury’s ability to raise the money needed to meet the expenditures that Congress has already made. If Treasury is limited in how much it can pay the government’s obligations the U.S. would default for the first time in history.

This would be catastrophic for markets all over the world.

Batten down the hatches, folks. There could be a monumental market storm in June.
Wendy

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I was kind of surprised by this announcement. I was under the impression that debt ceiling issues wouldn’t come up until that June time frame. But it sounds like they are already here.

That monumental market storm could be a whole lot closer than June. Sounds like the hurricane warnings should already be flying.

–Peter

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Apparently, June is when Treasury runs out of financial tricks to run out the string. We have been down this road many times before, as the government closed discretionary spending, like national parks and monuments. Seems that brinksmanship is more important that stability.

Steve

Is it brinksmanship or intentional failure for potential political gain? :thinking:

I’m wondering at what point government agencies have to shut down? Yellen will obviously make default the last thing to happen. So agency after agency will shut down in order to keep paying bonds off.

And I don’t know how this does not turn political. The crazies have vowed to cause a default if they do not get their way.

Get ready for a really, really, long delay before you get your tax refund. We know one of the things on the wish list is repeal of the increased funding that was already appropriated for the IRS. Another thing on the list is revoking support for Ukraine.

Steve

No problem. Make the supporters of revoking support for Ukraine the first to be drafted to fight on the front lines in Ukraine. Suddenly…

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