U.S. will hit debt limit Thursday, Yellen says

The U.S. is expected to reach its borrowing limit next Thursday, forcing the government to start using extraordinary measures to prevent a default on its debt, Treasury Secretary Janet Yellen told congressional leaders Friday.

The move will accelerate the debate in Congress about how to pass a debt limit increase. The stakes are high because conservative Republicans have made clear they want to attach government spending cuts to any such legislation now that the party is in the majority in the House, against the wishes of the Biden administration.

The Treasury has only a finite amount of time it can use extraordinary measures to avoid a default. Estimates are that the "X date" could be hit around the middle of this year.

"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," Yellen said.