Janet Yellen, the Treasury Secretary, has announced that the Treasury Department will need to take “extraordinary measures” in order to avoid reaching the debt ceiling next month. Yellen made this statement in a letter to Congress, warning lawmakers of the urgent need to address the issue before the government runs out of funds to pay its bills.
The debt ceiling is a legal limit set by Congress on the amount of money the federal government can borrow to fund its operations. Once the debt ceiling is reached, the government is unable to borrow any more money, which can lead to a government shutdown or even a default on its debt obligations.
Yellen’s letter comes as Congress is divided over how to address the debt ceiling issue. Democrats have called for a clean increase in the debt ceiling, while Republicans have demanded spending cuts or other concessions in exchange for their support.
In her letter, Yellen emphasized the importance of raising the debt ceiling in a timely manner to ensure that the government can continue to meet its financial obligations. She warned that failure to do so could have serious consequences for the economy, including higher interest rates, a weaker dollar, and disruptions in financial markets.
Yellen also noted that the Treasury Department has already begun to take steps to conserve cash and delay payments in order to avoid hitting the debt ceiling. However, she stressed that these measures can only buy the government a limited amount of time, and that Congress must act quickly to raise the debt ceiling before it is too late.
The last time the government reached the debt ceiling in 2019, Congress was able to reach a last-minute deal to raise the limit and avert a default. However, the issue has become increasingly contentious in recent years, with both parties using it as a bargaining chip in negotiations over government spending and other policy priorities.
As the deadline for raising the debt ceiling approaches, it is crucial that Congress puts aside partisan differences and takes swift action to ensure that the government can continue to operate without risking a financial crisis. Janet Yellen’s warning should serve as a wake-up call to lawmakers that the stakes are high, and the consequences of inaction could be dire.