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Yellen told Congress that the US national debt limit is expected to be reached on Thursday

Debate over raising the debt ceiling will almost certainly lead to a showdown between GOP lawmakers, who now control the House of Representatives, and Biden and the Democrats.

WASHINGTON – Treasury Secretary Janet Yellen notified Congress on Friday that the US is expected to hit its debt limit on Thursday and then resort to “extraordinary measures” to avoid a default.

In a letter to House and Senate leaders, Yellen said her actions would buy time until Congress passed legislation that would either raise the debt limit or put it on hold again for a set period of time.

These measures include deferring certain payments, such as contributions to federal employee pension plans, to provide some headroom for other payments deemed necessary, including for Social Security and debt obligations.

“Failure from government commitments will cause irreparable damage to the US economy, the livelihoods of all Americans, and global financial stability,” she said. “Indeed, in the past, even threats that the US government might default on its obligations have done real harm, including the only credit downgrade in our nation’s history in 2011.”

Yellen said that while the Treasury Department cannot estimate how long the emergency measures will allow the US to continue paying the government’s obligations, “it is unlikely that the cash and emergency measures will be exhausted before early June.”

Debate over raising the debt ceiling will almost certainly lead to a political showdown between newly empowered GOP lawmakers who now control the House of Representatives and President Joe Biden and Democrats who have enjoyed one-party control of Washington for the past two years.

Previous forecasts suggest that a default could instantly plunge the country into a deep recession, just as global growth slows, as the US and much of the world face high inflation due to the pandemic and Russia’s invasion of Ukraine.

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