Washington hit the debt ceiling today, barring the Treasury Department from borrowing from the public, so it will begin borrowing from federal workers’ pensions to keep the government afloat. Treasury is legally bound to reimburse the pensions, so retirees won't be affected, notes the Washington Post, but if the debt ceiling isn’t raised by Aug. 2, secretary Timothy Geithner warned again today that the US will hit default.
Republicans, however, aren't buying Dems' dire predictions, and the Wall Street Journal notes that a deal is likely far off, though both sides appear to want to avoid coming down to the wire. “There will be no debt-limit increase without serious budget reforms and significant spending cuts that are greater than any increase in the debt limit,” John Boehner said today, Politico reports. Consensus on where cuts might focus remains vague, but federal pension reform is said to be among items on the chopping block. Since 1985, the government has borrowed from special programs six times to prevent default—but this time, it needs much more money.