The U.S. government in Washington, D.C. faces a deadline to extend its debt limit on January 19 or risk defaulting on its obligations, a situation that would cause financial chaos.
The U.S. Treasury Department has said in a statement that “Failure to meet the government’s obligations would cause irreparable harm to the U.S. economy, the livelihoods of all Americans, and global financial stability.”
The U.S. government faces a count down on how long it can continue to make interest payments on its debt. In December 2021, Congress increased the federal debt limit to about $31.4 trillion U.S.
The limit is the total amount of money the U.S. government is allowed to borrow to pay for its existing obligations that include Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments.
The Treasury Department can take extraordinary measures to free up the government’s borrowing capacity and extend the clock for months while Congress negotiates legislation to raise the borrowing limit yet again.
A senior White House official said over the weekend that the Biden administration plans to pursue negotiations in earnest with Congress after the mid-April tax deadline has passed.
