Treasury Set to Take ‘Extraordinary Measures’ as Debt Limit Looms

 

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Treasury Secretary Janet Yellen has warned that the U.S. government is projected to reach its debt limit on January 19, which means that the Treasury Department will have to start using extraordinary measures to avoid defaulting on its debt. This is a brewing standoff in Congress, as the debt limit is a contentious issue and raising it requires the approval of both chambers. If Congress does not act, the Treasury will only be able to pay the government's bills for a limited period of time before it runs out of money. This could lead to a government shutdown or a potential default on its debt, which would have severe economic consequences.

Treasury Secretary Janet Yellen has warned congressional leaders that the U.S. government is projected to reach its debt limit of nearly $31.4 trillion on January 19, and that the Treasury Department will begin taking "extraordinary measures" to avoid defaulting on its debt. These measures involve repurposing federal funds in order to extend the date that the government is expected to run out of money. However, these measures are only temporary and will not solve the problem permanently. Secretary Yellen emphasized that a default on the nation's debt has never occurred in history and it's important for Congress to act in a timely manner to raise the debt limit, in order to avoid a potential default and its severe economic consequences.

Treasury Secretary Janet Yellen has emphasized the importance of Congress taking action to raise or suspend the debt limit in a timely manner. She warned that failure to meet the government's obligations would cause irreparable harm to the U.S. economy, the livelihoods of all Americans, and global financial stability. The letter comes amid a brewing debt limit standoff in Congress, with some Republicans expressing interest in using the new GOP House majority to seek spending cuts while leveraging the potential default. However, House Speaker Kevin McCarthy has stated that he would like to sit down with President Joe Biden early on to work through the impasse and the White House press secretary has emphasized the importance of a bipartisan approach without conditions. Secretary Yellen also noted that it is unlikely that cash and the extraordinary measures will run out before early June, while urging Congress to act promptly.