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US reaches debt limit Congress has until Aug 2 to act

first_imgWASHINGTON — The government has maxed out its credit card.The United States reached its $14.3 trillion limit on federal borrowing Monday, leaving Congress 11 weeks to raise the threshold or risk a financial panic or another recession.Treasury Secretary Timothy Geithner formally notified Congress that the government would halt its investments in two federal pension plans so it won’t exceed the borrowing limit. Geithner said the government could get by with bookkeeping maneuvers like that through Aug. 2. After that, the government could default on its debt for the first time, threatening the national credit rating and the dollar. Geithner sent Congress a letter saying he would be unable to make the pension investments in full. He urged Congress to raise the debt limit “in order to protect the full faith and credit of the United States and avoid catastrophic economic consequences for citizens.”Republican leaders in the House have said they won’t raise the debt limit unless the Obama administration first agrees to big spending cuts or to steps to lower the debt over the long run.last_img read more