At some point later this year, the US will not be able to pay all of its obligations on time and in full unless Congress acts to address the debt ceiling.
While talks between House Republicans and the White House remain stalled, some GOP lawmakers are looking at prioritizing certain payments in hopes of avoiding – or at least minimizing – the serious consequences of the US defaulting on its debt.
The idea isn’t new. It’s been floated before in past debt ceiling dramas, though it has never had to be implemented because Congress has always addressed the borrowing cap in time.
But in this round, the heightened political polarization in Washington, DC, may drive the nation closer to the edge of default than has been the case in years.
The US hit its $31.4 trillion debt ceiling in January, forcing the Treasury Department to take extraordinary measures to allow the federal government to continue paying its bills in full and on time. A default could come over the summer or in early September, according to various analyses.
Treasury Secretary Janet Yellen has repeatedly stressed the importance that Congress come together to address the borrowing cap as soon as possible. That warning, however, has not swayed President Joe Biden and House Republicans, who remain in a standoff over whether to include spending cuts in a debt ceiling measure.
Prioritizing payments to cover only certain obligations would not avoid a US debt default, Yellen has told lawmakers in recent hearings.
“Prioritization is effectively a default by just another name,” Yellen told senators at a committee hearing last week.
The US has a strong credit rating because of its commitment to be responsible in paying bills that it has already incurred, she said, noting that at least one credit rating agency has said that failure to pay any bill would call…
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