The U.S. is expected to reach its debt limit next Thursday, forcing the government to start using “extraordinary measures” to prevent a default, Treasury Secretary Janet Yellen told congressional leaders.
The U.S. is expected to reach its borrowing limit next Thursday, forcing the government to start using “extraordinary measures” to prevent a default on its debt, Treasury Secretary Janet YellenThe move will accelerate the debate in Congress about how to pass a debt limit increase.
The Treasury only has a finite amount of time to avoid a default using extraordinary measures — in this case, suspending investments in certain government retirement funds. Estimates are that the “X date” could be hit around the middle of this year. Yellen said it is unlikely that cash and extraordinary measures will be exhausted before early June.
Yellen’s letter formally kicked off what’s expected to be the most contentious debt ceiling battle in history, even after a series of recent episodes where Republican opposition brought the U.S. to the brink of being unable to pay its bills. The fight is a looming cloud over the economy because the market for U.S. Treasury securities is a bedrock of the global financial system, and volatility could impact lending products like mortgages. White House officialsThe debt ceiling is the legal limit in which the U.S. can borrow to pay for its existing obligations, including Social Security, Medicare and military salaries. The current limit is nearly $31.4 trillion.
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