Treasury Secretary Janet Yellen warns Congress that it will run out of room to stop the US from exceeding the government’s lending limit in October.
In a letter to congressional leaders on Wednesday, Yellen said he is still unable to provide a specific date for which he will not be able to keep the government funded, without congressional action to raise the debt limit.
“Based on our best and most recent information, the most likely outcome is that the money and extraordinary measures will run out during the month of October,” Yellen wrote.
The debt limit is the amount of money that Congress allows the Treasury to borrow to keep the government running. When the debt limit was suspended for two years in July 2019, the public debt subject to the limit was $ 22 trillion.
When the debt limit was reset, the limit was reset to $ 28.4 trillion, the level of existing debt. The big leap over the past two years has reflected the huge amount of support Congress has passed to help individuals and businesses overcome a global pandemic.
Yellen used what the law calls “extraordinary measures” that cover a variety of accounting maneuvers Yellen can take to remove debt from various government trust funds, including federal workers’ pensions. Once the debt limit impasse is resolved, the funds removed from the trust funds are restored with interest.
Yellen urged Yellen urged Congress to act without delay.
“Once all available measures and available liquidity are exhausted, the United States of America would not be able to meet its obligations for the first time in our history,” said Yellen.
While Republicans in Congress have often used the debt limit debate to get budget concessions from Democratic presidents, lawmakers have never failed to raise the debt limit or suspend it to allow the government to continue borrowing.
However, in 2011, a budget battle between the Obama administration and the Republicans dragged on for so long that Standard & Poor’s credit rating agency downgraded some of the Treasury’s debt from its AAA rating for the first time in the year. history.
“We have learned from previous impasse on debt limits that waiting until the last minute to suspend or increase the debt limit can cause serious damage to business and consumer confidence, increase short-term financing costs for taxpayers and have a negative impact on the US credit rating, “said Yellen.
“A delay that calls into question the federal government’s ability to meet all of its obligations would likely cause irreparable damage to the US economy and global financial markets,” he said. “I respectfully urge Congress to protect the full faith and credit of the United States by acting as soon as possible.”
Yellen said recent measures to tackle the debt limit have enjoyed “broad bipartisan support,” but Republicans said they will oppose the Democrats’ effort to tackle the debt limit by attaching a provision to a budget bill. emergency that Congress will have to approve before the start of the budget year on 1 October. That legislation is needed to avoid a government shutdown.
[ https://rocetoday.com/yellen-warns-us-may-hit-debt-limit-in-next-month/?utm_source=rss&utm_medium=rss&utm_campaign=yellen-warns-us-may-hit-debt-limit-in-next-month https://d26toa8f6ahusa.cloudfront.net/wp-content/uploads/2021/07/30214746/a-quiet-place-part-2-bigs-16.pdf