Treasury Secretary urged Congress that the debt ceiling be raised

 

Treasury Secretary Janet Yellen

Treasury Secretary Janet Yellen urged Congress that the debt ceiling be raised or suspended as the US government prepares to run out of cash.

With the US government nearing the inability to pay its bills, Treasury Secretary Janet Yellen urged Congress to move quickly to raise or suspend the debt limit. A divided Congress faces a growing list of urgency when it returns from recess later this month, but Democratic leaders have said they must tackle the debt limit.

Yellen wrote a letter to congressional leaders that funds and remarkable procedures will run out in October based on the administration's best information.

"Delays that call into question the ability of the federal government to meet all of its obligations are likely to cause irreparable damage to the US economy and global financial markets," Yellen said. "At the time when American families still suffer from the effects of Corona, it would be particularly irresponsible to jeopardize the trust and credit of the United States."

The maximum amount the United States can borrow by law is the total debt, two years ago in 2019 under President Trump, but the suspension expired at the end of July. Since then, the Treasury has used extraordinary measures to pay its bills, including suspending some investments. If its cash and temporary measures are fully exhausted, it will be the first time in history that the United States cannot meet its financial obligations.

Democrats want to support Republicans in addressing the debt ceiling, as they have done under previous administrations. House Speaker Nancy Pelosi said Wednesday that the Trump administration has amassed more than $7 trillion in debt and said raising the debt ceiling would pay what she called "Trump's credit card."

"When President Trump was president, we Democrats supported raising the debt ceiling because it's the responsible thing to do. And I hope Republicans will act in a similarly responsible manner," Pelosi said.

Pelosi said they have several options to address the debt ceiling, but "it has to happen." The spokesman said Democrats would not include it in the $3.5 trillion budget compromise being negotiated. Mitch McConnell predicted that Republicans would not vote to raise the debt limit and said Democrats would likely need to include it in their reconciliation bill because they would not need Republican support from the Senate.

"It would just be the height of irresponsibility for Republicans to play games and take debt limits hostage," Senate Majority Leader Chuck Schumer said Wednesday. "It would be a game with all the faith and grace of the United States, and it would be a horrible act, a despicable act."

On Monday, the Biden administration also sent guidance to Congress on the so-called ongoing decision to temporarily suspend government funding while the full legislation is being drafted.

In 2011, Republicans used the debt limit to pressure the Obama administration to address spending. And while the two parties eventually agreed, the uncertainty led to a US credit rating downgrade for the first time in history.