U.S. Reaches Debt Limit

Treasury Secretary Tim Geithner announced Monday that the U.S. has reached its debt limit.

The announcement, which Geithner made in a letter to members of Congress, comes amid heated debate on Capitol Hill over the necessary steps to raise the legal limit that the U.S. can borrow. Republicans have warned that they will only raise the limit if promised “trillions” in spending cuts and reform to key programs like Medicare.

The current debt limit stands at $14.3 trillion.

In the letter, Geithner stated that the Treasury Department will suspend investments in the Civil Service Retirement and Disability Fund for portions that aren’t immediately needed as well as the Government Securities Investment Fund of the Federal Employees’ Retirement System.

“Each of these actions has been taken in the past by my predecessors during previous debt limit impasses,” Geithner wrote, noting that the funds will be paid in full once the limit is raised and should therefore not have any negative consequences.

Although the limit has been reached, the Department has said that it can take additional steps to prevent the U.S. from defaulting, but that the deadline will be August 2.

Geithner urged lawmakers to raise the limit swiftly “in order to protect the full faith and credit of the United States,” noting that failure to do so would welcome “catastrophic economic consequences for citizens.”