U.S. Treasury chief urges Congress amid debt limit to avoid default

U.S. Treasury Secretary Janet Yellen on Friday urged Congress to suspend or raise the debt limit to avoid default on any obligation of the government.

Yellen said the outstanding debt of the U.S. is projected to reach the statutory limit beginning next Thursday, which was raised to almost $31.4 trillion on Dec. 16, 2021.

"Once the limit is reached, Treasury will need to start taking certain extraordinary measures to prevent the United States from defaulting on its obligations," she wrote in a letter to all members of Congressional leadership.

"Presidents and Treasury Secretaries of both parties have made clear that the government must not default on any obligation of the United States, and, as noted, Treasury Secretaries in every Administration over recent decades have used these extraordinary measures when necessary," she added.

The Treasury head noted that increasing or suspending the debt limit does not authorize new spending commitments or cost taxpayers money, but it simply allows the government to finance its existing legal obligations.

"Failure to meet the government's obligations would cause irreparable harm to the U.S. economy, the livelihoods of all Americans, and global financial stability," she warned.

The debt limit is the total amount of money that the U.S. government is authorized to borrow to meet its existing legal obligations, which include social security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments, Yellen noted.