What happens if US fails to lift it by then?

US Treasury Secretary Janet Yellen on Friday updated the date for a possible United States debt default to June 5 if Congress fails to raise the ceiling on borrowing, pushing back a previous estimate of June 1.

WASHINGTON - This gives negotiators for President Joe Biden and House Republican Speaker Kevin McCarthy a little breathing room as they work to find a bipartisan solution to lift the current spending cap, known as the debt ceiling.

But although murmurs of a possible deal have grown in recent days, no agreement has yet materialised as lawmakers head into the long Memorial Day weekend.

With each day that passes, the chance of the United States stumbling into a scenario where it cannot pay all its existing bills known as the "X-date" - is increasing.

In mid-January, the US federal government reached its borrowing cap of more than US$31.4 trillion (S$42 trillion). Since then, it has used special accounting measures to extend the life of the money it is allowed to spend without raising the borrowing limit.