US faces fiscal crisis over debt ceiling

The United States government faces a potential fiscal crisis after hitting its $US31.4 ($A45.6) trillion borrowing limit amid a stand-off between the Republican-controlled House of Representatives and President Joe Biden's Democrats on lifting the ceiling.

Treasury Secretary Janet Yellen informed congressional leaders including House Speaker Kevin McCarthy her department had begun using extraordinary cash management measures that could stave off default until June 5.

Republicans with a newly won House majority aim to use the time until the Treasury's emergency manoeuvres are exhausted to exact spending cuts from Biden and the Democratic-led Senate.

Corporate leaders and at least one credit ratings agency warned a long standoff could rattle markets and unsettle an already shaky global economy.

Yellen warned the June date was subject to "considerable uncertainty" due to the challenge of forecasting payments and government revenues months into the future.

"I respectfully urge Congress to act promptly to protect the full faith and credit of the United States," Yellen told congressional leaders in a letter on Thursday.

But there were no signs Republicans or Biden's Democrats were willing to budge.

Republicans are trying to use their narrow House majority and the debt ceiling to force cuts to government programs, and argue the Treasury could avoid default during a stand-off by prioritising debt payments.

This idea has been explored in past stand-offs but financial experts have questioned its feasibility.

The White House is rejecting the idea out of hand.

"There will be no negotiations over the debt ceiling," White House deputy press secretary Olivia Dalton reiterated Thursday aboard Air Force One.

"Congress must address this without conditions as they did three times under (Republican former President) Donald Trump."

The prospect for brinkmanship has raised concerns in Washington and on Wall Street about a bruising fight over the debt ceiling this year that could be at least as disruptive as the protracted battle of 2011, which prompted a downgrade of the US credit rating and years of forced domestic and military spending cuts.

Moody's Investors Service on Thursday said it believed Congress would reach a deal to avert default but negotiations would go down to the wire, contributing to market volatility.

"We're not going to default on the debt," representative Chip Roy, a leading conservative, told Reuters.

"We have the ability to manage servicing and paying our interest but we similarly should not blindly increase the debt ceiling,"

Roy dismissed concerns about unsettling markets and risking a recession.

"That's what they say every time. It's like clockwork," he said in an interview.

"We're already barrelling toward a recession. The question is what it's going to look like - unless the combination of monetary policy and fiscal policy saves us from our stupidity of having spent so much money."

Senate Republican leader Mitch McConnell predicted the debt ceiling would be lifted sometime in the first half of 2023 under conditions negotiated by Congress and the White House.

"The important thing to remember is that America must never default on its debt. It never has, and it never will," McConnell told reporters at the University of Louisville.

In the meantime, House Republicans are vowing to reject sweeping government funding bills from Senate Majority Leader Chuck Schumer, akin to the $US1.66 trillion ($A2.41 trillion) bipartisan omnibus package Congress passed late last year.