The White House warns that it does not intend to negotiate with the Republicans on an increase in the so-called debt ceiling, which sets the limit on how much the country can borrow.
“Both parties have previously cooperated to raise the debt ceiling and that’s the way it should be,” says President Joe Biden’s press secretary Karine Jean-Pierre.
Treasury Secretary Yellen says in a letter to the political leadership in Congress that the Treasury Department’s actions will buy time for politicians to legislate to either raise the cap or temporarily remove it.
The extraordinary measures involve, among other things, a redistribution of funds to create room for necessary payments, including social insurance.
According to Yellen, the measures are likely to keep the government afloat until at least “early June”.
The risk if politicians cannot agree is “irreparable damage to the US economy, the livelihoods of American households and global financial stability”, Yellen warns.
Dealing with the debt ceiling will be a test for Joe Biden and his Democrats, who lost their majority in the House of Representatives in the fall election.
In 2011, the United States’ credit rating was lowered for the first and only time as a result of stalled negotiations regarding the debt ceiling.