Treasury Secretary Janet Yellen Warns of Potential Default as U.S. Treasury Department Approaches Debt Ceiling Deadline

The U.S. Treasury Department is expected to hit the debt ceiling next Thursday, according to Treasury Secretary Janet Yellen. In a letter to House Speaker Kevin McCarthy, Yellen warned that the Treasury Department would need to begin taking “certain extraordinary measures” to avoid a potentially catastrophic default. Yellen said that while the Treasury Department can’t identify exactly when the measures will be exhausted, she said, it is “unlikely” that they “will be exhausted before early June.”

In response to Yellen’s letter, McCarthy said that Republicans will always protect Medicare and Social Security. He said that once they controlled the House of Representatives, they would try to balance the federal budget partly by cutting Medicare and Social Security, but also protect them for the next generation going forward.

Extraordinary measures allow the government to buy time so that Congress can negotiate and pass a debt limit increase. Yellen said that the measures enable “the government to meet its obligations for only a limit amount of time.”

The looming debt ceiling has raised concerns among lawmakers, who are now tasked with finding a solution to the issue. It remains to be seen how Congress will respond to the Treasury Department’s warning and what measures they will take to avoid a potential default.