The US Treasury Department said Friday it will likely begin "extraordinary measures" next week to prevent a default on government debt, setting up a high-stakes showdown in Congress over raising the nation's borrowing limit.
Treasury Secretary Janet Yellen, in a letter to congressional leadership, said that the United States was projected to reach its legal borrowing limit -- set at $31.4 trillion -- as soon as next Thursday.
It would therefore need to "start taking certain extraordinary measures" to prevent a default.
Any such measures would only help for a limited time, likely no longer than six months, she warned.
Congressional lawmakers have found themselves gridlocked over raising the debt limit, with some Republican policymakers pushing for it to be used as leverage in hopes of gaining spending cuts.
If the Democratic-controlled Senate and Republican-controlled House cannot come to an agreement, the world's largest economy could risk defaulting on its debt.
"Failure to meet the government's obligations would cause irreparable harm to the US economy, the livelihoods of all Americans, and global financial stability," Yellen warned.
"It is therefore critical that Congress act in a timely manner to increase or suspend the debt limit," she urged.
House Speaker Kevin McCarthy told reporters on Thursday that "we've got to change the way we are spending money wastefully in this country."
But the White House rebutted that raising the debt ceiling was not up for "negotiation."
President Joe Biden's press secretary, Karine Jean-Pierre, said the process was not meant to be "political football."
White House deputy press secretary Andrew Bates charged that House Republicans were "telling the country that they will cause the most egregious self-inflicted economic meltdown in modern history unless they can hurt the most popular programs in existence."
- 'Enormously concerning' -
The debt limit refers to the amount of money the US government is allowed to borrow to meet existing legal obligations, including Social Security and Medicare benefits.
America spends more money than it collects through taxation, so it borrows money via the issuing of government bonds, seen as among the world's most reliable investments.
Around 80 years ago, lawmakers introduced a limit on how much federal debt could be accrued.
Congress has always acted when called upon to raise the debt limit, according to the Treasury, and the ceiling has been lifted dozens of times.
Yellen noted Friday that "increasing or suspending the debt limit does not authorize new spending commitments or cost taxpayers money."
"It simply allows the government to finance existing legal obligations that Congresses and presidents of both parties have made in the past," she said.
The Treasury Department is unable to estimate precisely how long the extraordinary measures will allow it to continue paying the government's obligations, Yellen said.
But she cautioned that cash and the measures could be exhausted after early June.
Congressman Brendan Boyle, top Democrat on the House Budget Committee, called the situation "enormously concerning."
"Republicans need to do the right thing and come to the table to raise the borrowing limit before it's too late," he said in a statement.