WASHINGTON – Treasury Secretary Janet L. Yellen on Tuesday warned lawmakers that the United States would be unable to pay its bills soon after December 15 and urged Congress to take swift action to lift the borrowing cap from the country.
In a letter to Congress, Ms. Yellen said “there are scenarios in which the Treasury finds itself with insufficient remaining resources to continue funding US government operations beyond that date.”
She added, “To ensure the full confidence and credit of the United States, it is essential that Congress raises or suspends the debt ceiling as soon as possible. “
Ms Yellen issued similar warnings just a few weeks ago. Last month, after approaching the first default in U.S. history, Congress raised the legal debt limit to $ 480 billion, an amount the Treasury Department said would allow the government to continue borrowing until early December.
But that was only a short-term solution and the Republicans, who reluctantly joined Democrats in approving the temporary extension, insisted that President Biden and his party vote on their own to approve a suspension or lifting more. long term debt limit.
Ms Yellen acknowledged that Democrats have the ability to tackle the debt limit without the support of Republicans using a budget procedure called reconciliation. However, she said it would be best if the debt limit was raised on a bipartisan basis – which has long been the tradition given the government must meet the financial obligations Republicans and Democrats have made.
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 social security and funding military paychecks – would most likely occur between mid-December and mid-February.
Last month, Ms Yellen told a congressional hearing that she supported the elimination of the debt ceiling, which she says is “destructive” and poses unnecessary risks to the economy.
In her letter to Congress, Ms Yellen said the recently passed infrastructure bill would require the transfer of money into the Highway Trust Fund within one month of the law being passed and the transfer would be completed on December 15. Shortly thereafter at that time, the funds will be invested in non-marketable treasury securities, which are subject to the leverage limit.
Ms. Yellen noted that the government’s cash flow was subject to “inevitable variability” and that she would keep lawmakers informed of developments in the debt deadline.