WASHINGTON: The US Treasury began taking measures Thursday (Friday in Manila) to prevent a default on government debt, as Congress heads toward a high-stakes clash between Democrats and Republicans over raising the borrowing limit.

Such "extraordinary measures" can help reduce the amount of outstanding debt subject to the limit, currently set at $31.4 trillion, but the Treasury has warned that the tools would only help for a limited time — likely not longer than six months.

"I respectfully urge Congress to act promptly to protect the full faith and credit of the United States," said Treasury Secretary Janet Yellen in a letter to Congressional leadership on Thursday.

She added that there is "considerable uncertainty" on how long the measures can last before risking default.

"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 last week.

A default would harm US credibility, and JPMorgan Chase Chief Executive Jamie Dimon also cautioned Thursday that "we should never question the creditworthiness of the United States government."

"That is sacrosanct. It should never happen," he said in an interview with CNBC.

'Risky and dangerous'

Premium + Digital Edition

Ad-free access


P 80 per month
(billed annually at P 960)
  • Unlimited ad-free access to website articles
  • Limited offer: Subscribe today and get digital edition access for free (accessible with up to 3 devices)

TRY FREE FOR 14 DAYS
See details
See details