17 May 2011

US takes action to avoid breaching debt limit

11:59 am on 17 May 2011

The United States has reached its debt limit of $US14.3 trillion and is taking measures to cut spending to avoid breaching it.

Treasury Secretary Timothy Geithner has said that he will suspend investing into two large government pension funds, which the BBC says delays any breaching of the limit to 2 August.

Congress is negotiating an increase to the limit, without which the US risks defaulting on its debt.

In a letter to Congress, Mr Geithner urged representatives to act to increase the statutory debt limit "as soon as possible."

The full amount of the suspended payments into the two pension funds will be restored if Congress raises the debt ceiling.

The US Congress has set a limit on the total level of national debt since 1917.

The ceiling is periodically renegotiated but has become something of a political football as both Democrats and Republicans try to extract concessions in exchange for increasing the limit, the BBC says.