Yellen Tells Congress: We'll Hit Debt Limit Next Week

Treasury Secretary Janet Yellen has notified Congress that the US is projected to reach its debt limit on Thursday and will then resort to “extraordinary measures” to avoid default, Fatima Hussein and Lisa reported for the Associated Press (AP).

Photo Insert: “Failure to meet the government’s obligations would cause irreparable harm to the US economy, the livelihoods of all Americans, and global financial stability,” warned the Treasury Secretary.

In a letter to House and Senate leaders, Yellen said her actions will buy time until Congress can pass legislation that will either raise the nation’s $31.4 trillion borrowing authority or suspend it again for a period of time. But she said it’s “critical that Congress act in a timely manner.”

“Failure to meet the government’s obligations would cause irreparable harm to the US economy, the livelihoods of all Americans, and global financial stability,” she said.

“In the past, even threats that the US 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,” she said.

Yellen was referring to the debt ceiling impasse during Barack Obama’s presidency, when Republicans had also just won a House majority.

House Republican leaders liken the debt ceiling to a credit card limit and have said they would only raise the statutory ceiling if doing so also secures a spending overhaul.

In this new Congress, the debt ceiling debate will almost certainly trigger a political showdown between newly empowered GOP lawmakers who now control the House and want to cut spending and President Joe Biden and Democratic lawmakers, who had enjoyed one-party control of Washington for the past two years.

The White House has insisted that it won’t allow the nation’s credit to be held captive to the demands of GOP lawmakers.

“We have seen both Republicans and Democrats come together to deal with this issue,” White House spokesperson Karine Jean-Pierre told reporters Friday. “It is one of the basic items that Congress has to deal with and it should be done without conditions.”

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