United States government hits its debt ceiling

On January 18th, 2023, the United States government reached its borrowing limit of 31.3 trillion USD. As a result of this limit being reached, “extraordinary measures” have been introduced. This includes a hold on investment redemptions on government employees. Investment redemptions are a form of investment security. 


It’s not known how long these measures will be in place, although the United States has had brushes with the debt limit before. The major difference between this instance, and previous near misses. Is that Republicans in the house propose budget cuts, that would trim spending and negate the need for as much borrowing. The Biden administration, however, instead proposes that the debt ceiling be increased. This does have the benefit that existing financial institutions could continue to operate as normal. It also means that there would be no need to “cheap out” on any major budgetary areas. 


It’s also unclear how much spending the Republicans would actually cut. Republicans are attempting negotiations with the Biden administration, Republicans claim that the house and presidency are using the risk of a national default as a “political chip”. If these issues aren’t resolved, then it could lead to the United States defaulting on its national debt, this would cause an increase in interest rates, a stock market crash, and immense loss of jobs.