Welcome to National Debt Ceiling Day. That banging you’ve been hearing all morning is the sound the federal government makes when the deficit hits its $14.3 trillion limit.
The scratching easily mistaken for mice in the walls is the sound of last-minute measures and maneuvers designed to gain the country more time as politicians on Capitol Hill attempt to come to some sort of spending agreement.
Treasury Secretary Tim Geithner estimates he can buy about 11 more weeks, but after that the country officially begins to default on its obligations. Lawmakers have until Aug. 2 to raise the debt limit.
To stave off default until then, the federal government began tapping retiree pensions today. While federal law requires the Treasury repay any funds taken from retirement accounts, it’s a move certain to bring added anxiety to federal workers.
And it’s only a temporary solution. If Congress doesn’t raise the debt ceiling by Aug. 2, Geithner claims the fallout would be substantial. Contractual obligations will not be met, government services would be suspended and Social Security payments would not be made.
The Obama administration remains in favor of hiking the debt limit, but many Republicans in Congress continue to assert the ramifications of not raising the limit would not be as severe as Geithner claims.
Many federal pension holders who worry their accounts will be depleted disagree.
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