Timeline for Debt Limit Showdown Accelerates

Treasury Secretary Janet Yellen informed congressional leaders last week that the Treasury Department is beginning to use extraordinary measures to avoid defaulting on obligations after the U.S. officially hit its debt limit on Thursday. The letters from Secretary Yellen came sooner than many had expected and created a sense of urgency and anxiety on the Hill over the upcoming showdown to increase the limit.

House Republicans want to leverage must-pass legislation to raise the nation’s borrowing authority to extract significant federal spending cuts. However, the Biden Administration and congressional Democrats are resistant to participate in negotiations around potential cuts and view targeting popular social programs as a non-starter. The Treasury Department warned that extraordinary measures to cover the debt will be exhausted by June so if Congress fails to raise the debt limit by then, the economy could face unprecedented debt default. President Biden is scheduled to deliver the annual State of the Union address on Feb. 7 and will likely be discussing the debt ceiling in his speech. Read more here.