The US Treasury adopts emergency measures after the Government reaches the debt ceiling

The repeated appeals by the Treasury and the White House to resolve a political deadlock with unforeseeable consequences have been useless.

The US government has reached its debt limit of 31.4 trillion dollars this Thursday, which could lead to a fiscal crisis in the short term, given that the House of Representatives is controlled by the Republicans and they will use their parliamentary majority to demand new spending cuts from Biden and the Senate, in Democratic hands.

Congress thus becomes faithful to a scale that can unbalance the rest of the term of the Democratic president.

The prospect of an unprecedented default, the first, will loom over the political scene in the coming months, at a time of uncertainty due to fears of a recession in 2023.

The term that is reached today will not have any immediate effect, because the Treasury has adopted emergency measures to avoid breaching its obligations.

The most urgent risk will be seen in June, when the Government approaches the so-called

, beyond which the Treasury would be left without emergency liquidity or room for maneuver to face unavoidable payments.

Washington has its hands tied when it comes to issuing debt before Congress, the only one competent to raise that ceiling as it sees fit, a limit often used as a political bargaining chip.

The debt limit is the total amount of money the US government is allowed to borrow to meet its legal obligations to pay Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds and other disbursements.

The debt ceiling is a political

that is repeated periodically: the United States avoided the first federal debt default in October 2021 with a political agreement

.

Neither of the two parties have shown signs of rapprochement in this regard despite the pressure of the calendar;

to the contrary, many Republicans have insisted in recent days on their demand to cut federal spending over the next decade.

In a letter sent on the 13th, the Secretary of the Treasury, Janet Yellen, had urged the Republicans to reconsider their opposition to raising the debt ceiling.

This Thursday, she has informed in a statement of the "extraordinary measures" that the department that she directs has adopted to face the

while asking the leaders of Congress to raise the debt ceiling as soon as possible to avoid an unprecedented default.

The message was sent as an official communication to the Republican Speaker of the House of Representatives, Kevin McCarthy, and to the Democratic Minority Leader, Hakeem Jeffries.

The Treasury has approved a "debt issuance suspension period" from this Thursday until June 5.

“My predecessors [at the head of the Treasury] have declared debt suspension periods in similar circumstances,” recalls Yellen.

The exceptional measures imply suspending until then the reinvestment of the investment fund in government securities of the savings and retirement plan for federal employees.

Republicans oppose public spending

Yellen recalls that employees of the postal service will be especially affected, in terms of their retirement and disability pensions.

The postal service has been criticized by Republicans since the days of the Donald Trump Administration, as the epitome of unnecessary public spending.

During the campaign that led him to the presidency, in 2016, and in that of re-election, in 2020, the Republican attacked the postal service as the embodiment of all the evils of the public, in open opposition to his private management model. of the prison system.

Post offices and prisons then became defining emblems of both sides.

“As I noted in my January 13 letter, the length of time extraordinary measures may last is subject to considerable uncertainty, including the challenges posed by forecasting US government payments and revenue months ahead.

I urge Congress to act expeditiously to protect the full faith and credit of the United States," Yellen's message concluded.

The Treasury secretary has already said that it is "improbable" that the government will run out of liquidity before "early June."

The date of the abyss depends on a number of factors, including tax revenue.

His letter is the starting gun for a legislative battle that is expected to last for months, given that Congress is divided as a result of the midterm elections held last November, with Republicans controlling the House of Representatives, the Lower House, and the democrats clinging to the senate, the upper house.

Republicans control the bottom line by a narrow margin of seven seats, meaning a large minority of conservatives can block legislation.

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