The federal government officially reached its $31.38 trillion debt limit on Thursday, prompting the Treasury Department to begin using its “extraordinary measures” to avoid defaulting on the national debt for the next few months.
Treasury Secretary Janet Yellen announced in a letter to Congress last week that the U.S. would reach the debt limit on Jan. 19 and that her agency would have to deploy two of the four extraordinary measures at its disposal to continue to make payments on the debt and avoid default.
“Once the limit is reached, Treasury will need to start taking certain extraordinary measures to prevent the United States from defaulting on its obligation,” she wrote.
Based on the Treasury Department’s projections, Yellen noted that while there is uncertainty over how much time her agency can buy, “it is unlikely that cash and extraordinary measures will be exhausted before early June.” With the federal government now on borrowed time to act on the debt, lawmakers will have to work with the Biden administration to raise or suspend the debt limit to avoid a default later this year.
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