The U.S. hit the debt ceiling on Thursday, sending the federal government into a scramble to avoid a default scenario akin to a “global financial crisis,” as Treasury Secretary Janet Yellen described in a letter to Congress this week. Established more than a century ago, the debt ceiling is currently capped at $31.4 trillion. It is the legal limit the U.S. government is allowed to borrow to continue paying for its existing programs and obligations, including, but not limited to, “Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments,” Yellen wrote.
After informing Congress that the U.S. has reached that statutory limit, Yellen said the government is taking “extraordinary measures” to avoid the catastrophic economic and financial fallout that would follow a default. This puts pressure on lawmakers, who have to come up with some sort of package to raise the debt limit while agreeing on certain cuts to spending.