U.S. reaches debt limit, setting 'early June' deadline as Capitol Hill fight intensifies

The Treasury Department says it can continue to pay the bills using "extraordinary measures" for several more months before Congress must act to avert default.

WASHINGTON — The U.S. government is hitting its statutory debt limit on Thursday, requiring the Treasury Department to begin resorting to "extraordinary measures" to pay the bills.

In a recent letter to congressional leaders, Treasury Secretary Janet Yellen said those special financial tools can extend until "early June" and that Congress will need to act to prevent default.

"Yet the use of extraordinary measures enables the government to meet its obligations for only a limited amount of time. It is therefore critical that Congress act in a timely manner to increase or suspend the debt limit," Yellen wrote.

"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 said. "Indeed, in the past, even threats that the U.S. government might fail to meet its obligations have caused real harms, including the only credit rating downgrade in the history of our nation in 2011."

Yellen's warning comes as the new Republican House majority, led by Speaker Kevin McCarthy of California, demands conservative policy concessions in the form of spending cuts to lift the debt ceiling.

"Let’s change our behavior now. Let’s sit down. He’s the president. We’re the majority in the House. The Democrats are the majority in the Senate. And that’s exactly the way the founders designed Congress to work, find the compromise and find the commonsense compromise that puts us back onto a balanced budget," McCarthy told reporters Tuesday on Capitol Hill.

McCarthy, R-Calif., said a debt limit increase with no strings attached was "totally off the table," adding that federal retirement spending should be curtailed to save those programs from bankruptcy. "Let's sit down and find a place that we can protect Medicare and Social Security for the future generations. Let's put our house in order."

“I’d like to sit down with all the leaders, especially with the president, start having discussions. I think it’s a sign of arrogance, if you would say, he wouldn’t even discuss it,” McCarthy said.

But the White House has made clear what President Joe Biden's offer to lift the debt ceiling is: nothing.

“We should be dealing with the debt ceiling without — without conditions. It is important. We’re not going to negotiate on this,” White House press secretary Karine Jean-Pierre told reporters.

“This is just another attempt by congressional Republicans to force unpopular cuts on programs critical to seniors, the middle class and working families. Congress needs to act and do so quickly. There is no excuse for political brinkmanship," she said on Tuesday, dismissing the idea that the federal government can breach the debt limit and decide which bills to pay.