Treasury activates ‘extraordinary measures’ to avoid default

The Treasury Department said Thursday that the U.S. began using “extraordinary measures” to pay its bills after the government reached its $31.4 trillion borrowing limit.

The move, which Treasury Secretary Janet Yellen warned lawmakers about last Friday, marks a key next step in the political stalemate between House Republicans and the Biden administration over increasing the debt limit and avoiding a U.S. financial default.

Conservatives want a deal that includes spending cuts but the White House says meeting the country’s obligations should be non-negotiable.

Treasury expects its remaining cash and extraordinary measures — in this case suspending investments in government retirement funds — will buy time through at least early June.

"As I stated in my January 13 letter, the period of time that extraordinary measures may last is subject to considerable uncertainty, including the challenges of forecasting the payments and receipts of the U.S. Government months into the future," Yellen said Thursday. "I respectfully urge Congress to act promptly to protect the full faith and credit of the United States."