WASHINGTON (AP) — The United States is expected to reach its debt ceiling next Thursday, Treasury Secretary Janet Yellen warned in a letter to House Speaker Kevin McCarthy, R-Calif., on Friday.
Beginning on that date, Jan. 19, Yellen said, the Treasury Department would have to take “certain extraordinary measures” to avoid a potentially disastrous default.
Extraordinary measures allow the government to buy time until Congress can negotiate and pass an increase in the debt limit. Yellen stated in the letter that the measures allow “the government to meet its obligations for only a limited period of time.” She stated that while the Treasury Department cannot predict when the measures will be exhausted, she believes they will be exhausted “before early June.”
Yellen stated that Congress must act as soon as possible to raise or suspend the debt ceiling.
“Failure to meet the government’s obligations would cause irreparable harm to the US economy, all Americans’ livelihoods, and global financial stability,” she said.
Even threats by lawmakers not to raise the debt ceiling, according to Yellen, have “caused real harms, including the only credit rating downgrade in our nation’s history in 2011.” The ceiling was last raised by Congress in December 2021.
Her warning comes just a week after McCarthy was sworn in as Speaker of the House following a protracted intraparty battle. Democrats have expressed concern that now-majority House Republicans will use the debt limit to try to pass spending cuts. They are also concerned that House Republican leadership will be unable to unite its divided caucus in order to pass legislation.
McCarthy addressed those concerns during his first weekly news conference as speaker on Thursday, saying Republicans “don’t want to put any fiscal problems through our economy, and we won’t.”
McCarthy suggested that the 2019 bipartisan deal to raise the debt ceiling would serve as a model for what the current Congress could pass. McCarthy suggested that in exchange for raising the debt ceiling, lawmakers could impose a spending cap.
“Spending here is out of control,” he said. “There has been no oversight, and we cannot continue in this manner.”
The speaker indicated a willingness to negotiate with Democrats, whose support the GOP will require in the Democratic-controlled Senate to raise the debt ceiling and pass other must-pass legislation.
“When the president called me,” he said, “I had a very good conversation with him, and I told him I’d like to sit down with them early and work through these challenges.”
However, White House press secretary Karine Jean-Pierre stated on Friday that the debt ceiling should be raised without regard to policy.
“We believe when it comes to the debt limit, it has been done in a bipartisan way over the years and decades, and it should be done in a bipartisan way, and it should be done without conditions. “That is critical here,” she told reporters. “We will not enter into any negotiations.”
