The split U.S. Congress is set for a fight over the raising of the debt limit. By law, federal government debt cannot exceed $31.4 trillion. The cap has already been reached, although the U.S. Treasury can use special account measures to hold off defaulting on liabilities until June. Congress must either raise the debt limit or reduce the deficit. Although reductions in Medicare and Social Security are so far “off the table,” there are other areas which could see spending decrease. Treasury Secretary Janet Yellen said that failing to raise the ceiling would be “a calamity.” Default would be disastrous to financial markets, although the government has managed to avert default after several fights over the last decade.
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