Home > 2011 > Personal Finance > U.S. Maxes Out Its Credit

U.S. Maxes Out Its Credit

Advertiser Disclosure Comments 0 Comments

USTreasury_AgnosticPreachersKid_WikimediaCommonsThe United States has reached its self-imposed debt ceiling of $14.29 trillion, Treasury Secretary Timothy Geithner told Congress on Monday. The federal government will have to dip into retirement funds for federal employees just to stay open, Geithner said.

The announcement immediately heightened political tensions in Washington. The Obama administration is urging Congress to increase the debt limit or risk a repeat of the global recession.

“As the recent financial crisis demonstrated, a severe and sudden blow to confidence in the financial markets can spark a panic that threatens the health of our entire global economy and the jobs of millions of Americans,” Geithner wrote in a letter to Sen. Michael Bennet (D – CO).

[Article: A Subprime Pioneer’s Notes on the Financial Crisis She Predicted]

Meanwhile, Congressional Republicans demand big spending cuts.

“This is actually a great opportunity to address this burgeoning problem,” said Sen. Mitch McConnell (R – KY). “We have $50 trillion dollars in unfunded liabilities, that is, promises we’ve made [regarding] very popular programs [including] Medicare, Social Security, Medicaid, that we can’t meet.”

The Treasury Department can keep the federal government functioning for about 11 weeks by discontinuing payments into the Civil Service Retirement and Disability Fund. That will give the government about $12 billion. The funds will be repaid after Congress raises the debt ceiling, the Treasury said.

But that fix can only last until Aug. 2. After that, the government will shut down unless Republicans and Democrats find a compromise.

[Featured tool: Get your free Credit Report Card from Credit.com]

Image: AgnosticPreachersKid, via Wikimedia Commons

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.