US Treasury Secretary warns of default risk by early June

US Treasury Secretary Janet Yellen said last week that the United States will likely hit the $31.4 trillion statutory debt limit on Jan 19, forcing the Treasury to launch extraordinary cash management measures that can likely prevent default until early June. “Once the limit is reached, Treasury will need to start taking certain extraordinary measures to prevent the United States from defaulting on its obligations,” Yellen said in a letter to new Republican House of Representatives Speaker Kevin McCarthy and other congressional leaders. She urged the lawmakers to act quickly to raise the debt ceiling to “protect the full faith and credit of the United States. “While Treasury is not currently able to provide an estimate of how long extraordinary measures will enable us to continue to pay the governments obligations, it is unlikely that cash and extraordinary measures will be exhausted before early June,” the letter added. Republicans now in control of the House have threatened to use the debt ceiling as leverage to demand spending cuts from Democrats and the Biden administration Republicans now in control of the House have threatened to use the debt ceiling as leverage to demand spending cuts from Democrats and the Biden administration. This has raised concerns in Washington and on Wall Street about a bruising fight over the debt ceiling this year that could be at least as disruptive as the protracted battle of 2011, which prompted a brief downgrade of the US credit rating and years of forced domestic and military spending cuts.