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Janet Yellen warns of ‘extraordinary measures’ as U.S. on track to hit debt ceiling next week

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Treasury Secretary Janet Yellen informed Congress on Friday that the U.S. is expected to reach its debt ceiling on Thursday, after which it will resort to “special measures” to avoid a default.

In a letter to House and Senate leaders, Yellen said her actions would take time until Congress passed legislation to either raise the debt ceiling from its current level of just over $31 trillion or suspend it for a period of time. said it would earn

“I am writing to inform you that, beginning Thursday, January 19, 2023, the U.S. outstanding debt is projected to reach the statutory limit,” Yellen said. Certain special measures must be taken to prevent default.”

These measures include delaying some payments, such as contributions to retirement plans for federal employees, to provide room for making other payments deemed essential, such as Social Security and debt instruments. will be

“Failure to meet our government’s obligations will cause irreparable harm to the American economy, the lives of all Americans and global financial stability,” she said. “In fact, in the past, even threats that the U.S. government might not meet its obligations have done real damage, including the only credit rating downgrade in our country’s history in 2011.”

Yellen said the Treasury cannot estimate how long the temporary measures will allow the U.S. to continue paying its government debt, but “it is unlikely that the cash and temporary measures will be exhausted by early June.” rice field.

The debate over raising the debt ceiling will almost certainly be centered on the newly empowered Republicans who now control the House of Representatives, President Joe Biden and the Democrats who have enjoyed one-party rule in Washington for the past two years. lead to a political confrontation between

Past projections have shown that debt defaults could hit the country hard at a moment when global economic growth is slowing, as the United States and much of the world faces high inflation due to the pandemic and Russia’s invasion of Ukraine. It is suggested that there is a possibility of falling into a recession.

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