Treasury Secretary Janet Yellen warns US Congress will hit national debt ceiling on Thursday

Jan. 13 (UPI) — Treasury Secretary Janet Yellen warned Congressional leaders on Friday that the national debt limit would be reached on Thursday. She said “extraordinary measures” would be used to prevent a default unless the limit was raised.

In a letter to congressional leaders, Yellen wrote, “Government failure would irreparably damage the US economy, the livelihoods of all Americans, and global financial stability. Indeed, in the past, even threats that the US government might fail to meet its obligations have done real damage, including the only credit downgrade in our country’s history in 2011.”

The debt limit is the total amount of money that the US government is authorized by Congress to borrow to pay off existing liabilities.

These liabilities include Social Security and Medicare benefits, military wages, tax refunds, interest on the public debt, and other payments.

In her letterYellen said, “I respectfully urge Congress to act quickly to protect the full faith and confidence of the United States.”

Yellen’s letter says that if the debt limit is not raised by Thursday, the Treasury will take two “emergency measures.”

Existing investments in the Public Service Pension and Incapacity Fund will be retired and new investments will be suspended. Reinvestment in the Government Securities Investment Fund (G Fund) of the federal employee pension system will also be suspended.

Yellen said that once the deadlock with the debt limit is broken, those funds will be restored.

She said the Treasury cannot provide an estimate of how long the cash and emergency measures will last to meet the US government’s financial obligations, but “it is unlikely that the cash and emergency measures will be exhausted before early June.”

House Speaker Kevin McCarthy is expected to seek significant federal budget cuts before approving action to raise the debt ceiling.

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