That Thud You’re About to Hear Is the U.S. Hitting the Debt Ceiling

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The last of the Treasury bonds under the $14.3 trillion debt ceiling are expected to sell today, officially maxing out America's credit cards. This will set in motion eleven weeks of political turmoil as Tim Geithner struggles to keep the U.S. from defaulting on its legal obligations by the delayed August 2 deadline. Negotiations have been underway on how to reduce the deficit enough so that lawmakers can raise the amount the U.S. is allowed to borrow. Congress members have refused to raise the ceiling unless spending is cut and measures are taken to address long-term fiscal problems like healthcare costs. But on Face the Nation yesterday, John Boehner said, "I'm not seeing any real action." As the Washington Post points out, the reason we're still up and running is because:

Geithner, who has already suspended a program that helps state and local government manage their finances, will begin to borrow from retirement funds for federal workers. The measure won’t have an impact on retirees because the Treasury is legally required to reimburse the program.

But pensions could be affected as part of the debt deal. Republicans propose saving more than $120 billion over the next decade by requiring civilian workers to contribute more than the $1 currently paid for $15 in their pension plan toward retirement, effectively imposing a 5 percent pay cut on more than 2 million federal employees. Vice President Biden says cuts in agricultural subsidies are also up for debate.

Geithner's temporary pension maneuver will only last until August 2. After that, if a deal isn't reached and the ceiling is raised, government services, including the disbursal of Social Security, could be suspended. In a taped segment, also for Face the Nation yesterday, President Obama said,

If investors “around the world thought the full faith and credit of the U.S. was not being backed up, if they thought we might renege on our IOUs, it could unravel the entire financial system,” Obama said. “We could have a worse recession than we’ve already had.”

For those among us wondering whether it will be possible to, like, hang a chandelier on the debt ceiling, Intel Dan has answers.

Treasury to tap pensions to help fund government [WP]
It's Debt Ceiling Day, and We're Having a Pension-Cutting Party [Weigel/Slate]
Boehner Says U.S. Must Raise Debt Limit [Bloomberg]
As Debt Limit Reached, Agreement Still Far Off [WSJ]
Majority sees debt limit 'disaster' [Politico]
Earlier: The Absolute Moron’s Guide to the Debt Ceiling