WASHINGTON — Treasury Secretary Janet L. Yellen warned lawmakers on Tuesday that the United States would be unable to pay its bills soon after Dec. 15 and urged Congress to take swift action to lift the nation’s borrowing cap.
In a letter to Congress, Ms. Yellen said that “there are scenarios in which Treasury would be left with insufficient remaining resources to continue to finance the operations of the U.S. government beyond this date.”
She added: “To ensure the full faith and credit of the United States, it is critical that Congress raise or suspend the debt limit as soon as possible.”
Ms. Yellen issued similar warnings just weeks back. Congress raised the statutory limit on debt by $480 billion last month as the United States neared its first default in American History. The Treasury Department estimated that this would allow the government to continue borrowing until early December.
But this was a temporary fix. Republicans, who voted with Democrats to approve the temporary extension, insist that President Biden and his Party vote independently to approve a longer-term suspension of the debt limit.
Ms. Yellen acknowledged that Democrats can address the debt limit with or without Republican support through a budgetary process called reconciliation. However, she has said it would be preferable for the debt limit to be raised on a bipartisan basis — which has long been the tradition given the government must meet financial obligations that both Republicans and Democrats have incurred.
The Bipartisan Policy Center estimated late last month that the so-called X-date — the point at which the United States would be unable to fully meet all of its obligations like paying out Social Security and funding military paychecks — would most likely occur between mid-December and mid-February.
Last month, Ms. Yellen said at a congressional hearing that she supported eliminating the debt limit, which she believes is “destructive” and poses unnecessary risks to the economy.
Ms. Yellen stated in a letter to Congress that the recently passed Infrastructure Bill would require money to transfer into the Highway Trust Fund no later than one month after its enactment. The transfer would take place Dec. 15. The funds will then be invested in non-marketable Treasury securities, which are subject the the debt limit.
Ms. Yellen noted that government cash flows were subject to “unavoidable variability” and that she would keep lawmakers apprised as the debt limit deadline changes.
Source: NY Times