US will hit debt ceiling next week, Yellen says in announcing ‘extraordinary measures’
Zachary Halaschak
Video Embed
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.
WHY FOOD STAMP PAYMENTS HAVE SOARED, EVEN AS LABOR MARKET RECOVERS
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.
The government currently has a congressionally mandated $31.4 trillion borrowing limit. In order to raise that, the closely divided Congress must pass a law.
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.
The U.S. has never defaulted on its obligations in the history of these fiscal showdowns. Republicans see the deadline as an opportunity to exact concessions from the Biden administration and Democrats.
The GOP is hoping to see spending cuts in light of soaring inflation and high deficits. Meanwhile, Democrats have bristled at the notion of Republicans using the deadline as a political tool.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
McCarthy told reporters this week that he is hoping to sit down with President Joe Biden early on in the process in order to discuss fiscal issues and priorities that Republicans have.
“We’ve got to change the way we’re spending money wastefully in this country,” the California congressman said.