U.S. hit debt limit today
Kai Ryssdal: The federal government’s official count of its debt has reached $14.294 trillion, and no longer counting. The Treasury Department can’t borrow any more money until Congress says it’s OK.
Washington will still manage to pay its bills for another couple of months, though. Marketplace John Dimsdale explains how the government is pushing back the day of reckoning.
John Dimsdale: The Treasury Department got ready for today a little over a week ago. It stopped paying federal money into a fund state and local governments use to float their own bonds at higher interest rates. The federal government has used this move in the past, and it can mean a delay in issuing new state and municipal bonds. But this year, Scott Pattison at the National Association of State Budget Officers says interest rates are so low, states can raise their own money.
Scott Pattison: Because of the current interest rate environment, there isn’t a need for state and local governments to take advantage of this program to any great degree.
Treasury will also stop putting money into two federal employee pension funds. The Urban Institute’s Robert Reischauer says the delay won’t affect current or future retired government workers.
Robert Reischauer: Because when the crisis is over the Treasury is required by law to pay all of the interest these funds would have received had these special actions not been taken.
Combined, all the cashflow changes give Treasury a little over $200 billion, so it can pay its bills for another 10 or 11 weeks. But it’s not reducing any debts. So, budget negotiators are considering cutting federal employee retirement benefits as part of a deal to raise the debt ceiling.
In Washington, I’m John Dimsdale for Marketplace.
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