(C) Common Dreams
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Yellen says Treasury is taking extraordinary measures to avoid default as U.S. hits debt limit [1]

['Chelsey Cox']

Date: 2023-01-19

U.S. Treasury Secretary Janet Yellen holds a news conference in the Cash Room at the U.S. Treasury Department in Washington, U.S. July 28, 2022. Jonathan Ernst | Reuters

The Treasury Department started taking so-called extraordinary measures to keep paying the federal government's bills as the U.S. hit its debt limit Thursday, Treasury Secretary Janet Yellen said. In a letter addressed to House Speaker Kevin McCarthy, R-Calif., Yellen said the Treasury will suspend new investments in the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund from Thursday until June 5, 2023. But she warned both moves are subject to "considerable uncertainty" if Congress does not pass a bill to increase the $31.4 trillion debt ceiling. The Treasury secretary told lawmakers Friday that she believes the extraordinary steps could allow the government to pay its obligations until early June. Yellen last week urged Congress to "act in a timely manner to increase or suspend the debt limit," as failing to do so could lead to a first-ever default on U.S. debt and cause economic damage around the world.

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The White House also urged Congress on Friday to raise the debt ceiling "without condition." The Treasury secretary warned last week that the U.S. government would hit the statutory debt ceiling on Thursday, after which extraordinary measures would be taken to keep the government from defaulting on its debt obligations. The U.S. government has not defaulted on its debt, but the debt ceiling has been raised 22 times from 1997 to 2022, according to the Government Accountability Office. The Biden administration will prioritize negotiations for a new bill to increase the debt limit after the mid-April tax deadline, according to a senior White House official. Concessions sought by the new Republican House majority have led to concerns that Congress could have trouble raising the debt ceiling before June. Certain GOP lawmakers have said they want to slash spending as part of an agreement to increase the borrowing limit. Some Republican representatives have said major spending cuts to key government programs like Medicare and Social Security were part of the negotiations that helped McCarthy secure support from hard-line conservatives and win the speakership. McCarthy has called for cuts to avoid bankrupting programs like Medicare and Social Security. "You couldn't just keep increasing it," he said on the Fox News Channel program "Fox News Sunday." "Let's sit down and change our behavior for the good of America. Because what we're going to do is bankrupt this country and bankrupt these entitlements if we don't change their behavior today." Other House Republicans, such as Reps. Ralph Norman of South Carolina and Chip Roy of Texas, have also demanded spending decreases ahead of any debt limit increase.

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[1] Url: https://www.cnbc.com/2023/01/19/yellen-says-treasury-is-taking-extraordinary-measures-to-avoid-default-as-us-hits-debt-limit.html

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