Treasury Secretary Janet Yellen wrote a letter calling on Congress to raise the debt ceiling as soon as possible, stating that the United States will reach its limit on January 19th.
“Treasury Secretary Janet Yellen notified Congress on Friday that the U.S. is projected to reach its debt limit on Thursday and will then resort to ‘extraordinary measures’ to avoid default.
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.
Those measures include divesting some payments, such as contributions to federal employees’ retirement plans, in order to provide some headroom to make other payments that are deemed essential, including those for Social Security and debt instruments.
‘Failure to meet the government’s obligations would cause irreparable harm to the U.S. economy, the livelihoods of all Americans, and global financial stability’, she said. ‘Indeed, in the past, even threats that the U.S. 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’.
Yellen said that while Treasury can’t estimate how long the extraordinary measures will allow the U.S. to continue to pay the government’s obligations, ‘it is unlikely that cash and extraordinary measures will be exhausted before early June’.
Treasury first used these measures in 1985 and has used them at least 16 times since, according to the Committee for a Responsible Federal Budget, a fiscal watchdog. But the extraordinary measures only work for so long, and would probably run out — and put the U.S. at risk of default”. -Fatima Hussein, Associated Press
Though it sounds like a rather ordinary measure, I suppose Yellen has a point, and we must raise the debt ceiling.
Otherwise, Zelenskyy might have trouble cashing the blank checks we keep sending him.
Not only is this proposed measure an increase in the amount of debt, but it also increases the risk that the U.S. won’t be able to service its debt, let alone repay it.