Treasury Secretary Janet Yellen said the department will begin taking special accounting maneuvers on Jan. 19 to avoid breaching the U.S. debt limit, urging lawmakers to boost the ceiling to avert a devastating payments default.
“The period of time that extraordinary measures may last is subject to considerable uncertainty due to a variety of factors, including the challenges of forecasting the payments and receipts of the US government months into the future,” Yellen wrote in a letter to bipartisan congressional leaders. “It is unlikely that cash and extraordinary measures will be exhausted before early June.”
The letter kicks off what’s likely to be a prolonged, intense political battle over US fiscal policy that observers warn could put a major strain on financial markets and elevate dangers for an economy already facing the risk of recession. Economists expect the Treasury will run out of cash around August if the debt-ceiling isn’t boosted.
