U.S. Reaches Debt Ceiling, No Immediate Impact

U.S. Reaches Debt Ceiling, No Immediate Impact

Secretary of the Treasury Tim Geithner announced this morning that the United States has reached the legal limit of how much debt it can incur. Just weeks ago, the imminent breach of the $14.3 trillion debt ceiling was the source of political angst in Washington, but Geithner is keeping the government solvent until August 2 by not contributing the government’s share to certain government retirement accounts.

In a letter to Congress, Geithner notified the congressional leadership that Treasury will not “invest fully” in the Civil Service Retirement and Disability Fund or the Government Securities Investment Fund (the “G” Fund) of the Federal Employees’ Retirement System. He said those accounts would be “made whole once the debt limit is increased.”

He stated that, as required by law, he has determined that a “debt issuance suspension period” begins today and will run until August 2, by which time he hopes Congress will have raised the debt limit.

Democrats and Republicans are far apart, or close to agreement, on how to deal with the deficit depending on who is speaking at any particular moment in time.

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