The United States may need to take “extraordinary measures” to prevent a default on its debt as early as next week, when it is projected to hit the borrowing limit currently set by Congress, Treasury Secretary Janet Yellen warned Friday.
“Failure to meet the government’s obligations would cause irreparable harm to the US economy, the livelihoods of all Americans, and global financial stability,” Yellen warned in a letter to Congressional leadership.
The United States is projected to reach its debt limit next Thursday, she wrote.
“Once the limit is reached, Treasury will need to start taking certain extraordinary measures to prevent the United States from defaulting on its obligations,” she wrote.
But any such measures would only help for a limited time, likely no longer than six months, Yellen warned.
“It is therefore critical that Congress act in a timely manner to increase or suspend the debt limit,” she urged.
Lawmakers have found themselves gridlocked on the issue, with some Republican policymakers pushing for the debt limit to be used as leverage in hopes of gaining spending cuts that Democrats are against.
Treasury is unable to estimate precisely how long the extraordinary measures will allow it to continue paying the government’s obligations, Yellen said.
But she cautioned that cash and the measures could be exhausted after early June.
