A last-ditch attempt to keep the U.S. economy afloat is now underway. The Treasury Department started to suspend investments in federal retirement and disability funds today in order to stop a possible default.
"I have written to Congress on previous occasions regarding the importance of timely action to increase the debt limit in order to protect the full faith and credit of the United States and avoid catastrophic economic consequences for citizens," Treasury Secretary Timothy Geithner said in a letter to Congress. "I again urge Congress to act to increase the statutory debt limit as soon as possible."
Geithner noted the funds “will be made whole once the debt limit is increased” and “federal retirees and employees will be unaffected by these actions.”
We’re on schedule to hit the debt limit of $14.294 trillion sometime today. The Treasury has been shuffling funds around to buy more time. Now, Congress has until August 2 to act.
The risk of going past the deadline? We could be the next Greece (but without the awesome beaches) and face another massive recession.
There’s a mixed bag of reaction to the news on Capitol Hill today.
House Speaker John Boehner rejected an immediate increase for the time being. He said in a statement, "There will be no debt limit increase without serious budget reforms and significant spending cuts — cuts that are greater than any increase in the debt limit."
White House spokesman Jay Carney warned those who oppose raising the limit are "whistling past the graveyard."