Treasury Secretary Janet Yellen has told Congress that the U.S. will reach its debt limit on Thursday and will have to resort to “extraordinary measures” to avoid default. Yellen made the admission in a Friday letter to lawmakers asking Congress to either raise the nation’s $31.4 trillion borrowing authority or suspend it again for a period of time.
Breaking News: The U.S. will hit the debt limit Jan. 19, Treasury Secretary Janet Yellen said, as she pledged “extraordinary measures” to pay the nation’s bills if lawmakers do not act to raise the limit. https://t.co/c2xBp2JRZB
— The New York Times (@nytimes) January 13, 2023
Some of the measures include divesting payments, like contributions to federal employees’ retirement plans to provide some headroom to make other payments that are deemed essential, including those for Social Security and debt instruments.
BREAKING: The U.S. will hit the debt limit Jan. 19, Treasury Secretary Janet Yellen has said, as she pledged “extraordinary measures” to pay the nation’s bills if lawmakers do not act to raise the limit, per NYT.
— unusual_whales (@unusual_whales) January 13, 2023
Yellen revealed that failure to meet the government’s obligations would cause “irreparable harm” to the economy, global financial stability and negatively impact the livelihoods of all Americans.
“Indeed, in the past, even threats that the U.S. government might fail to meet its obligations have caused real harms, including the only credit rating downgrade in the history of our nation in 2011,” Yellen wrote in her letter.
Yellen, however, noted that while her office can not estimate how long the measures will allow the government to meet its obligation, it is unlikely that “cash and extraordinary measures will be exhausted before early June.”
Congressional Republicans, who assumed control of the House last week, have argued that an increase to the nation’s debt limit must be accompanied by spending cuts, including cutting back on military and domestic spending.
“The American people are the ones that’s demanding the cut in spending,” Rep. Jason Smith (R-MO) and the chairman of the House Ways and Means Committee told Fox News.
“We have to have fiscal reforms moving forward. We cannot just give an unlimited credit card,” he added.
Senator Rick Scott (R-FL) echoed Smith’s sentiments while noting that the government must cut reckless spending.
“It’s long past time for Washington to end the reckless spending of taxpayer dollars and start living within its means,” Scott said, adding that he looks forward to “working with House Republicans so we can stop caving to the Democrats, finally end Biden’s raging inflation crisis and bring fiscal sanity back to Washington.”