U.S. Reaches Federal Debt Limit; Treasury Warns of 'Catastrophic' Consequences if Congress Doesn't Act

The United States reached the legal limits of its borrowing authority on Monday, as heated fiscal debates take place around the country. The Treasury Department is saying that it's using federal pension funds, among several emergency measures, to sustain the country's bills until Congress can meet a budget compromise. Republicans, led by Representative Paul Ryan of the House, have insisted on deep spending cuts. According to a Reuters report, "Speaking to top financial executives at the Economic Club of Chicago, Ryan said any deal would have to include spending cuts that are larger than the amount of the debt-ceiling increase -- a tougher stance than conditions that have been laid out previously by other party leaders. "For every dollar the president wants to raise the debt ceiling, we can show him plenty of ways to cut far more than a dollar of spending," Ryan said. The Treasury's website notes that "Failing to increase the debt limit would have catastrophic economic consequences. It would cause the government to default on its legal obligations – an unprecedented event in American history. That would precipitate another financial crisis and threaten the jobs and savings of everyday Americans – putting the United States right back in a deep economic hole, just as the country is recovering from the recent recession." Currently, the debt limit stands at $14.3 trillion. Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit – 49 times under Republican presidents and 29 times under Democratic presidents. Legislative battles are expected to ensue throughout the summer. It remains to be seen whether there will be negative economic consequences of the situation.