The United States will hit the federal debt limit next week, and the Treasury will begin taking action to keep the government from defaulting on its debt, Treasury Secretary Janet Yellen announced.
Federal debt is projected to reach the statutory limit next Thursday. In a letter to House Speaker Kevin McCarthy, Yellen said that the Treasury Department will take “extraordinary measures” to prevent the U.S. from defaulting on its obligations, but that the Treasury will only have a few months before those measures are exhausted.
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Yellen said that the temporary actions to prevent the country from defaulting would be sufficient to carry the U.S. through early June, setting up a rough deadline for a showdown in Congress, which now has a Republican-controlled House.
She said, “The use of extraordinary measures enables the government to meet its obligations for only a limited amount of time. It is therefore critical that Congress act in a timely manner to increase or suspend the debt limit.”
Yellen said that Congress must act to raise or suspend the cap, or the U.S. could fall behind on its obligations or fail to make a payment on the debt, a scenario that would have catastrophic effects on global financial markets. Yellen said failure to meet the government’s obligations would cause “irreparable harm” to the economy.
Raising the ceiling has resulted in tension in the past, as the party out of power has often demanded concessions for agreeing on an increase.
This story is breaking and will be updated.
