U.S. Treasury Secretary warns that special measures to prevent the federal government from reaching its debt limit may be exhausted by August, urging Congress to take action as soon as possible.

U.S. Treasury Secretary Janet Yellen recently wrote to House Speaker Paul Johnson, warning that the "extraordinary measures" the Treasury Department uses to avoid default may be exhausted as early as August this year. She called on Congress to immediately raise or suspend the debt ceiling before their mid-July recess to maintain the credit and debt-paying ability of the U.S. government. Yellen pointed out in the letter: "After reviewing the financial receipts following the April tax season, we believe it is reasonable to assume that the government's cash reserves and extraordinary measures may be exhausted during the congressional recess." The U.S. government hit the statutory debt limit of $36.1 trillion in early January this year. To avoid default, the Treasury Department has since then initiated so-called "extraordinary measures," which involve shifting funds through accounting methods to fulfill payment obligations. However, according to a previous statement from the Treasury Department, most of these tools have been exhausted as of April 30. The updated deadline by Yellen reflects a tighter cash flow situation for the federal government than previously. She urges Congress to take action before the recess to prevent a debt crisis in August. According to a survey of Wall Street analysts, it is generally expected that the Treasury Department will run out of payment ability by August to October at the latest. Phillip Swagel, the director of the Congressional Budget Office, also stated earlier this month that the government may face a situation of running out of funds at "the end of summer, i.e., between August and September." Currently, Republican lawmakers are advancing a legislative proposal to raise the debt ceiling by about $5 trillion, with the core content of the bill being to continue and expand the tax cut policy promoted by Trump in 2017. However, due to the complexity of the bill, negotiations could last for several months. Yellen hopes that the legislative work can be completed by July 4th, Independence Day, but Senate Majority Leader Toomey has stated that this goal is still "ideal." If Republicans fail to pass their own proposal within the deadline, they will have to negotiate with Democrats, which could also give Democrats the opportunity to balance Trump's policy views in the debt ceiling negotiations. Despite facing significant challenges, Yellen has repeatedly emphasized that the U.S. will never default on its sovereign debt. She stated at a House Appropriations Committee hearing, "The U.S. government will never default, the Treasury will not play any tricks, and we will ensure the debt ceiling is raised." It is worth noting that President Trump has expressed a desire to completely eliminate the debt ceiling mechanism, but the "fiscal hawks" within the Republican party have long seen it as a key tool to control government spending and strongly oppose unconditionally raising the limit.